At 9.15am, the rupee was trading at 64.44 a dollar, down 0.11% from its Monday’s close of 64.37

The 10-year bond yield gained for the fourth session on Tuesday to hit nearly 17-month high ahead of the key inflation data due after 5.30pm, while the rupee weakened marginally against the US dollar.

At 9.15am, the 10-year bond yield was at 7.226%, a level last seen on 27 July 2016, compared to its previous close of 7.175%. Bond yields and prices move in opposite directions.

Bond yields are already under pressure and have risen over 70 basis points since the end of July on expectation of higher inflation, concern over high bond supply and potentially wider fiscal deficit due to higher crude oil prices and reduction of goods and services tax on some items last month. Earlier in the morning, international crude oil prices hit $65 per barrel for the first time since June 2015.

The Indian rupee weakened marginally against US dollar. At 9.15am, the rupee was trading at 64.44 a dollar, down 0.11% from its Monday’s close of 64.37. The rupee opened at 64.46 a dollar.

So far this year, the rupee has gained 5.52%, while foreign institutional investors (FIIs) have bought $8.22 billion and $22.99 billion in equity and debt, respectively.

The benchmark Sensex fell 0.13%, or 42.33 points, to 33,413.46. So far this year, it has gained 27%.

According to a Bloomberg poll, inflation is likely to accelerate 4.28% in November from a year ago, its fastest pace since September last year and up from 3.58% in October. Index of Industrial Production (IIP) probably rose 2.8% year-on-year in October versus 3.8% gain in September, the survey said.

The government will also issue wholesale price inflation (WPI) data on Thursday. The Bloomberg survey shows that WPI will be at 3.8% in November compared to 3.59% in October.

Traders will also be cautious ahead of the US Federal Reserve outcome on 14 December. Analysts expect the US Fed to raise interest rates for the third time in 2017, which will mark the fifth rate hike since the financial crisis. This will be the final rate hike of outgoing Fed chair Janet Yellen’s tenure.

source: livemint.com