On Friday 26th February 2021, the market was bears’ playground with the bulls having nowhere to hide.
As the international markets were bleeding in red, the Indian capital markets were not left untouched by the global sentiments.
Nifty 50 is down by 450 points, a fall of about 3% from the last trading day’s close. The same goes for Sensex which too is down about the same percentage.
Most of the experts of the stock market opine that the markets are expected to enter a consolidation phase. In other words, the prices of stocks will remain in a range and neither go very high or very low relatively.
There appears to be a consensus that today’s action so far has been due to the following reasons:
Bond yields rise
American Treasury yields were at their 52-week high. The same is being explained due to expectations of a strong economic expansion and the attendant inflation.
Similar to the US bond yields, the national bond yield are at 6.18% yesterday.
American air strikes
Yesterday, the USA launched airstrikes in Syria targeting facilities near the Iraqi border which were allegedly used by Iranian-backed militia groups.
International markets
The chain of rise in the US bond yields leading to downward pressure in tech stocks led to Asian stocks declining.
The story was similar in Australian, Japanese, and Hong Kong markets.
Crude oil price rise
Even though the crude oil was down slightly, still on a month-to-month basis, both Brent and WTI crude oil are up in the range of 20%.
GDP (Gross Domestic Product) data of Quarter 3
The GDP data release in expected in the latter half of the day, and investors are cautious as a result. The market would be looking forward to seeing whether the recession continued or, as some as believe, the economy has grown.
One group is estimating a contraction of about 2% while the other group is seeing a growth of 1.8%.
Anyways, all in all, investors are seeing either losses or a massive reduction in their paper profits, while informed traders are seeing huge profits betting against the market (which is technically called shorting).