NEW DELHI, 22nd August (IANS) – A sharp rise in US bond yields is affecting capital flows to emerging markets like India, says VK Vijayakumar, chief investment strategist at Geojit Financial Services. There are currently two dominant factors affecting stock markets.
First, the robust US economy is supporting global growth and global equity markets. that is positive. Second, the sharp rise in US bond yields (at 4.34 percent, the highest since 2007) is affecting capital flows to emerging markets like India. This is negative for Indian markets, he said.
A sustained increase in FII inflows will only occur if US bond yields fall. Clarity on this will only emerge when the development of US inflation and the monetary policy course of the Federal Reserve point to a weakening.
Investors should wait for clarity on these macroeconomic trends, he added.
Meanwhile, long-term investors can hoard high-quality growth stocks. Large capitalized banks are now valued fairly. The outlook for large caps in the capital goods sector is good, he said.
is up 54 points to 65,270 points as of Tuesday morning. NTPC (NS:) and Bajaj Finance (NS:) are up more than 1 percent.
–IANS
sun/ksk
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