Global bond yields rise. Will it hurt Indian stocks?
As global bond yields surge, India’s borrowing costs remain surprisingly resilient.
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Aarati Krishnan
Aarati is the Head of Advisory at PrimeInvestor.in PMS. A leading voice in the Indian financial services space, she has been tracking and writing about the entire gamut of financial products and regulations in India for over 30 years now. She was earlier Consulting Editor with the Hindu Business Line and Value Research Online. She is a member of SEBI’s Mutual Fund Advisory Committee. Her columns have influenced regulations and policymaking for the financial sector at a national level. LinkedIn | Twitter
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7 thoughts on “Global bond yields rise. Will it hurt Indian stocks? ”
Hi Aarthi – This is with respect to your point – “gap on 10 yr yield closing to 200 bps between US and India”.
This seems like US has gone from good (1.6) to bad (5.2) rather than India becoming any good – from 6.6 to 7.2 in the last 10 years.
I’m not clear how you are relating this to India credit rating better informally ? Could you explain more on this ?
Yes. US has gone from good to bad is correct. But when you compare Indias fiscal parameters and debt with countries like France you do feel that the official BBB sovereign rating doesn’t do justice to India. The fact that markets are allowing Indias sovereign yield to trade at 7.4% shows that informally they don’t rate India a BBB. If indian debt was really so low ranking they would sell indian bonds more to lift the yield.
Got it. Thanks for the quick response !!
nice article. Unlike the fear on the wall street, the situation is not that grave for India and Indian equities. However flight of capital out of India will continue with US treasuries yield rising and differential between Indian and US bond yields narrowing. Add to that the usual rupee depreciation and Indian markets are no more attractive to foreign investors. Earnings growth is the only trigger to hope for.
Yes FII flows are a concern
What about the impact on Indian bonds? What duration and class of debt funds are suitable in today’s scenario? Thank you.
In India too rates and yields will go up but perhaps by 25 to 50 bps. Better to stick to short duration bonds as of now.