Inflows into Indian debt have already tapered over the past two weeks, with the daily average inflow in July being just about ₹300 crore. In June, the daily average FPI inflow in debt was 10 times more-at nearly ₹3,000 crore. On a monthly basis, FPIs invested ₹41,774 crore in June and ₹7,581 crores in July, CCIL data showed.
Read more: New closing auction triggers confusion, sparks late Nifty swings
U.S. Treasury yields saw a decline on Monday as oil prices plummeted. President Donald Trump's recent announcement about renewed discussions with Iran helped ease inflation concerns, pushing U.S. crude prices down to below eighty dollars per barrel. Consequently, the benchmark ten-year Treasury yield fell from an eighteen-month peak, and the two-year yield also saw a substantial drop.
On Monday, the benchmark 10-year bond yield reacted marginally to Bloomberg's decision to defer inclusion of India in the Index. Traders remain wary of one key medium-term risk-the possibility of interest rate hikes by the US Federal Reserve.
"One or two hikes are being priced in because we don't know how global rates would be over the course of the year. But right now, the bias is towards staying put. I don't expect a major rally and 6.70% or lower levels are possible if oil prices fall further," said Alok Singh, head of treasury at CSB Bank.
Traders are not taking a large position ahead of the monetary policy scheduled to be announced on Wednesday even as an ET poll of 12 economists said that the central bank will maintain the policy rate unchanged yet again. Markets will closely watch the RBI's commentary for any hawkish signals, which could provide clues on the future path of monetary policy, treasury heads said.
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(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
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