New Delhi: Amidst volatile trade, Indian stock markets surrendered early gains and settled lower due to fag-end selling in banking and telecom stocks.
The BSE Sensex closed 166.33 points or 0.21 percent lower at 78,593.07 while the NSE Nifty dropped 63.05 points or 0.26 percent to end at 23,992.55.
Market had a rebound in its opening trade, in line with Asian markets, however, the momentum fizzled out later in the day. Appreciating Yen, weak US economic data, and rising geopolitical tensions are the major factors weighing on investors' sentiments.
Talking to Zee Media, Vishal Goenka, Co-Founder of IndiaBonds.com said, "The recent turbulence in global stock markets highlights the critical need for a diversified investment portfolio. While equities have historically provided robust returns, their inherent volatility calls for a balanced approach. Integrating bonds into your investment strategy can greatly enhance your portfolio's stability during market downturns."
But what are the options for investors? Goenka said, "Bonds serve as a counterbalance to the volatility of the equity market. With their relatively lower volatility and potential for steady income generation, bonds can offer much-needed stability to your financial plan. From the security of government bonds to the higher yields of corporate bonds, the bond market offers a wide array of options tailored to various investor profiles."
The relationship between bond yields and interest rates is crucial. As interest rates fluctuate, bond prices move inversely. A potential Fed rate cut this year could positively impact bond prices and yields, making them an attractive investment. However, it is essential to manage interest rate risk by assessing the duration of your bond holdings effectively, explained Goenka.
He added that by carefully considering factors such as interest rate risk, credit risk, and bond maturity, investors can build a bond portfolio that complements their equity holdings.
"This strategic allocation can help mitigate losses during market corrections and provide a smoother investment journey over the long term," he said.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd. said, "Technically, the Nifty index has formed a red candle on the daily scale and is still holding below bearish gaps. As a result, the index is likely to face resistance near the 24,690 and 24,960 levels. Sustenance below 24,000 will likely trigger further selling pressure in the index. On the downside, 23,600 and 23,300 will provide significant support for the Nifty in the immediate term."
