Expert view, Sept. 18 -- Niharika Tripathi, the head of products and research at Wealthy.in, believes a sustained rise in real yields would justify some compression in valuation for companies whose cash flows lie far in the future. In an interview with Mint, Tripathi said Indian equities may be absorbing the global bond-yield shock, but it would be premature to conclude that the entire impact has been reflected in valuations. Edited excerpts:

Rising bond yields matter for equity valuations because they increase the return investors can earn from relatively lower-risk assets and, consequently, raise the discount rate applied to future corporate earnings.

The US 10-year Treasury yield has moved close to 5%, while India's 10-year governmen...