Markets Report

Money market

Sentiment: Cautious

• The gilts mart was subdued on inflation concerns, and prices at best edged up.
• The benchmark 10-year 7.37 per cent bond was quoted at 5.1366 per cent against Saturday's 5.1200 percent.
• The 8.07 per cent 2017 bond was traded at 5.4885 per cent against the previous 5.4671 per cent.
• Participants refrained from taking positions on fears that inflation could be kicked up further if petrol and diesel prices go up.
• The RBI expects inflation to ease to 4.0-4.5 per cent by the end of the fiscal year in March, although traders were concerned that there were no signs yet of that happening.

Forex market

Sentiment: Bullish

• FII inflows and bunched up weekend dollars lifted the rupee from early lows to a slightly firmer 45.4100/4150 per dollar.
• Forward premiums rose as banks transacted sell-buy swaps to hold onto higher-yielding rupees.

Outlook

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Continued foreign institutional investor inflows could help extend the rupee's rebound on Tuesday.