Ind-Ra: Markets Begin 2016 with Focus on FPIs

India Ratings and Research (Ind-Ra) expects the coming week to see broad-based participation from markets with global data points providing cues for movements. Domestically, the focus will be on the government debt limit tranche for foreign portfolio investors (FPIs). Rupee, therefore, is likely to stay in the range of 65.9-66.4/USD. Government bonds may note capped gains as larger macroeconomic concerns outweigh the interim positive impact of FPI limit hike. The 10-year yield is also likely to hover between 7.69%-7.79% for the week, as the cautious undertone may prevail.

Globally, the year begins with a slew of data to be released this week. Beginning with Caixin China Manufacturing Purchasing Managers' Index on Monday, the week will see the release of private payroll report (Automatic Data Processing payroll) on Wednesday along with minutes from the December meeting of Federal Open Market Committee (FOMC). This will be followed by an official US December employment report on Friday. Later in the week, China will release its December's retail and producer price inflation.

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