Stock markets: The US seems to be a villain once again for the Indian stock market. The Sensex and Nifty saw a decline on Wednesday 22 May. The Sensex closed down by about 644 points. During the business, one time had fallen to 1100 points. In such a situation, there will be a question in your mind that why did the stock market suddenly come to a sudden big decline? The direct reason for this is America, America’s bond yield and President Donald Trump there. How these three factors are pressurizing the Indian stock market together, let’s understand-
The biggest reason behind Wednesday’s decline in the stock market was a surge in America’s bond market. America’s 30 -year bond yield has jumped to 5 per cent. At the same time, 10 years of bond yield has also increased to 4.5 percent. Worse, the worse thing has been that the US government on Wednesday organized an auction for the sale of its bond yield, on which it received a very weak response from investors. This indicates that investors no longer believe in America’s economy as before. You will remember that a few days ago the global rating agency Moody’s also reduced the rating of the US date outlook, expressing some similar fears.
Due to all this, the US stock market declined on Wednesday, which also saw the impact on the Indian stock markets on Thursday. Now let’s understand what is the relationship with the bond market of the stock market. You compare the bond market with FDs of banks, on which investors get a fixed interest. Usually, when the bond yield i.e. interest on it goes up, the stock market declines. For example, the 30 -year bond yield of America has reached 5 percent.
In such a situation, foreign investors can think that they are getting 5 per cent interest here without taking any risk, so why should they go towards the stock market? Due to this, foreign investors sell. On Tuesday 20 May, he withdrew about 10 thousand crores from the Indian stock market. Along with the US, Japan’s 40 -year bond yield has also increased to 3.5 percent. In such a situation, the pressure on foreign investors in foreign stock markets by taking cheap debt from Japan-US, which traded carrying carry.
Now the question is, why is there such a boom in the bond yield? Its direct region is the policies of Donald Trump. Ever since Donald Trump became President again, he has been taking such steps, which is increasing the debt of the US government. At this time, his total debt in the US has reached about 100 percent of his GDP. In just 2024, the US government took a new loan of $ 2.6 trillion. America’s debt has become so much that it paid interest on only that loan of $ 880 billion in 2024. This amount is more than the total defense budget of America.
Amidst all this, Donald Trump has given another new tension to investors. There are reports that the US government is working on a new budget, which includes a tax deduction proposal. The market fears that this tax deduction will reduce the income of the US government and it will again take new debt to fulfill its debt, which will increase its deficit. This can lead to further bounce in the bond yield.
Due to all this, the Indian stock market today declined sharply. However, market experts say that the fundamental of the Indian stock market is quite strong, due to which no major decline will be seen here. The recent survey of Bank of America stated that India remains the most favorite investment site in Asia among foreign investors. In such a situation, when foreign investors turn to the quality shares, India will remain in the top spot when the bund yield bounces. This is the reason that in such situations, the Indian stock market shows fluctuations in short-term, but later also makes the market as fast as fast.
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Disclaimer: The ideas and investment advice given by experts/brokerage firms on Moneycontrol are their own, not the website and its management. Moneycontrol advises users to consult a certified expert before making any investment decision.
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