The Sensex fell 1.2 per cent, or 585 points, to close at 49,216.52. The Nifty dropped 1.1 per cent, or 163 points, to end at 14,557.85. Both indices have fallen almost 4 per cent in the past five days.
Yields on US 10-year Treasury rose to 1.7 per cent for the first time since January 2020 on Thursday. The American central bank said on Wednesday it expected higher economic growth and inflation in the US this year. It, however, reiterated its pledge to keep the interest rate near zero.
“The market is tracking the moves of the US 10-year bond right now. It is the pace at which the bond yields are rising that is worrying investors,” said Amit Shah, head, equity research, BNP Paribas India. “It looks like the market is not entirely convinced with what the statements of the Fed chairman with regard to keeping rates low till 2023 while aiming for full employment and steady inflation.”
Foreign portfolio investors (FPIs) net bought shares worth Rs 1,258.47 crore on Thursday, while their domestic peers were sellers to the tune of Rs 1,116.17 crore.
Overseas investors have continued pumping money into local equities despite surging bond yields. In the past five sessions, when the market fell, they have bought to the tune of over Rs 14,000 crore, which includes purchases through block deals. So far in March, these investors have put close to Rs 22,000 crore into stocks here after investing Rs 21,960 crore in February and Rs 14,500 crore in January.
Shah said the spread of Covid-19 of late is less worrying for investors than rising bond yields for now. India has seen a surge in coronavirus cases with over 35,000 new cases in the past 24 hours — the highest daily increase since early December.