Market mayhem: India earnings yields now trading higher than US bonds

Following the recent correction, the Indian equity market is now trading at a discount compared to the yield on the benchmark US 10-year government bond. The benchmark S&P BSE Sensex is currently trading at an earnings yield of 4.3 per cent, nearly 58 basis points higher than the yield on the US 10-year Treasury bond, which has dropped to 3.72 per cent, its lowest in 15 months.

For nearly a year beginning September last year, the Sensex earnings yield was lower than the US benchmark bond yield. The yield spread was minus 0.31 per cent at the