Benchmark yields fall, US inflation to set tone

The benchmark 10-year yield on the 6.54% 2032 dated stock closed the day at 6.81% as compared to the previous close of 6.86%.

But sentiment remained cautious ahead of the European Central Bank’s monetary policy meeting and the release of US inflation data.

The rupee also closed 25 paise stronger at 76.30 against the US dollar in the spot market on the back of Reserve, mirroring the improved sentiment due to fall in oil prices and strong show by Bharatiya Janata Party in state elections.

The resumption of diplomatic talks between Russia and Ukraine also boosted investor confidence.

However, the outcome of the European Central Bank’s monetary policy and release of the US inflation data will be keenly tracked.

“Market players are now gearing for US inflation data and ECB’s monetary policy meeting. ECB is expected to keep monetary policy unchanged but market players want to see if there is any change in ECB’s monetary policy outlook owing to recent developments relating to Russia,” Kotak Securities said in a note.

“If the ECB takes a cautious tone owing to geopolitical risks, it may mean that a rate hike may not happen soon and this may put some pressure on the euro,” it said.