Indian bonds and stocks rebounded after early falls on Tuesday to end stronger while the rupee recovered from the day’s low. Anxiety after the surprise resignation of Reserve Bank of India (RBI) Governor Urjit Patel the previous day kept financial market sentiment subdued. Markets initially plunged in reaction to Patel’s resignation announcement, after markets closed on Monday, which shocked many investors.

The broader NSE Nifty tumbled as much as 1.47 percent, but ended the day 0.58 percent firmer while the BSE Sensex closed 0.54 percent higher. The rupee closed at 71.8650 to the dollar versus its previous close of 71.35. It had earlier dropped 1.5 percent to a one-month low of 72.4625. It touched a day high of 71.68, aided by some dollar-selling intervention by state-run banks on behalf of the RBI.

The benchmark 10-year bond yield closed down 6 basis points on the day at 7.53 percent after initially rising as high as 7.71 percent.

A senior trader at a large state-run bank said they had been buying debt as all the negative news that had been feared had been delivered.

“Now we have to look forward. Markets are now being governed by macro fundamentals which look good as oil is stable and no rate hikes are expected any time soon."

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