Money
Sentiment: Cautious
Yields on gilts ended higher for the fourth straight day on Wednesday as traders began to doubt that the central bank would cut interest rates as earlier expected and continued to book profits.
The benchmark 10-year bond, the 7.40 per cent 2012, closed at 7.0494 per cent, up from Tuesdays 7.0408 per cent.
It has risen nearly three basis points from its life low of 7.0223 per cent hit last Friday.
Corporate bond yields were little changed in dull trade on Wednesday as investors cut back on purchases, worried that the central bank might not cut rates at its monetary policy review next week.
The five-year yield benchmark was at 7.044 per cent, just slightly lower than Tuesdays 7.05 per cent.
Traders expected the 10-year gilt yield to trade between seven and 7.10 per cent till the policy announcement.
Outlook: Yields on gilts are expected to keep to a tight range on Thursday as traders are unlikely to buy much, with many now nagged by concerns that an eagerly expected rate cut might not materialise after all. Call rates are seen stuck to a groove.
Forex
The rupee lost ground for the second successive day on Wednesday to end at 48.3850/3950 per dollar, down from the previous close of 48.36/37, as some corporates lined up to purchase the greenback.
Dollar sales by state-owned banks at 48.40 levels in the afternoon stemmed further decline in the rupee.
There were some early purchases of dollars on behalf of a large corporate.
The rupee was expected to start firmer as banks usually go short on dollars on Wednesdays and buy them back before the weekend to gain from the swap differential.
Traders said the early demand for dollars discouraged the short sales. Apart from some sugar exporters selling dollars, supplies were a bit scarce.
Outlook: The rupee could open on a weaker note on Thursday on more dollar purchases by corporates seeking to hedge payables. But it is unlikely to fall much because state-run banks are expected to sell dollars on behalf of the central bank, they said.
