Equity market valuation rises as US bond yields ease

The Indian equity market valuation has been moving in tandem with the US 10-year treasury yield. While the benchmark US bond yield has witnessed a nearly 70 basis point decline since the end of October this year, dropping from 4.93 per cent to 4.23 per cent on Friday, the Sensex earnings yield has slipped by nearly 45 basis points – from 4.5 per cent to 4.05 per cent. Previously, Indian equities’ earnings yields rose in sync with the US bond yields.