Markets may slide further as BJP misses majority mark in Karnataka

Indian markets are likely to make a pessimistic start tracking weak global cues. The sentiments may remain dampened as the US treasury yield on the 10-year benchmark surged to its highest level since 2011, which indicates a more hawkish Federal Reserve going ahead with rate hikes and that would not go down well with the emerging markets. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that Nifty could open with a gap down of 74 points at 10,751.50.  

Majority of Asian markets have come under selling pressure on Wednesday as the US treasury yields on the 10-year benchmark hit its highest level since 2011 crossing the 3.07%-mark. For a long time, the level of 3% on yields was considered to be the outer limit which also stands breached now. Hong Kong’s Hang Seng has dropped 0.79% and China’s Shanghai Composite and Japan’s Nikkei 225 have slipped 0.47% and 0.38%, respectively.  

Back home, markets got off to a subdued start mirroring global cues, but within a few minutes, the bulls took charge and the indices witnessed a super-duper rally in the initial hour of trading session. But, as always, there is a twist in a fairy tale and this fairy tale too had a dramatic twist as the indices gave away their entire initial gains and the markets witnessed high volatility as BJP failed to sustain its early leads in Karnataka. Although BJP emerged as the single largest party in Karnataka, it fell short to achieve magic number of 112. At the end, Nifty closed down by 5 points at 10,802 and BSE Sensex settled at 35,544 down by 13 points. The broader market indices encountered widespread selling, with Nifty Mid-cap and Small-cap tumbling 0.92% and 1.10%, respectively. In terms of sectoral performance, majority of the indices ended in the red. Nifty PSU Bank slumped 2.37% and Nifty Realty dropped 2%, while Nifty IT gained 0.44% followed by Nifty Metal.   

The US equity markets closed firmly in the negative terrain on Tuesday with the Dow snapping its eight-day winning spree. The selling pressure was seen due to a jump in the US treasury yields; with the 10-year treasury yield topping at 3.07%, which represents the highest level since 2011. The Dow Jones Industrial Average slumped 193 points to close at 24,706, the S&P 500 index lost 19 points to finish at 2,711 and the Nasdaq Composite plunged 60 points to end the day at 7,352.  

The European markets, after oscillating between small gains and losses throughout Tuesday’s session, ended the day on a mixed note. The DAX of Germany slid 0.06%, CAC 40 of France rose 0.23% and the FTSE 100 of UK edged higher by 0.16%.