Indian rupee gains 3.5 paise on Tuesday
rupee traded flatish on Tuesday with a gain of 3.5 paise at the end of the trading session. This is the third consecutive session where the local currency has gradually gained in expectation of index inclusion that will happen this week. The rupee closed at 83.432/$1 on Tuesday.
As the month-end approaches, the demand from local oil companies makes the rupee trade lower, but such a case was not seen this month.
“When there is such a demand, the rupee tends to trade lower, but today was not the case as later this week we have the index inclusion. In anticipation of the same, the market preempts the inflows and has adjusted the price”, said Dilip Parmar, technical analyst at HDFC Securities.
The 10-year benchmark government bond also traded flat, with yields closing at 6.98% on Tuesday, up just one basis point from the last close.
Yields have been touching a low of 6.95% to 6.96% in the middle of the day, but again rise as the day progresses.
“Index inclusion is keeping the market supported, but today and yesterday market did give up a lot of its gains, because the expectation is that whatever flow that has to come, a lot of it has already come and hence market may be a bit disappointed when the actual inclusion happens”, said a trader from a primary dealership.
Liquidity has been a tight deficit of more than Rs. 1.6 lakh crores, but markets expect liquidity to ease next month onwards as the government starts spending.
“Yes, liquidity is in a tight deficit and RBI is not conducting enough VRR auctions. All PSU
