The yield on India's 10-year bond on Monday surged nearly 10 basis points, marking its biggest gain in five months, after global crude oil prices rose amid supply concerns. Meanwhile, the Indian rupee weakened for the third straight session against the US dollar.
The bond yield ended at 7.073%, up 10 basis points, and compared with Friday's close of 6.974%.
The rupee closed at 69.66 against the US dollar, down 0.27% from its previous close. It had opened at 69.44 and touched a low of 69.68 during the day.
Oil prices rose above $54/bbl as US drilling activity fell to the lowest since February 2018 and after Saudi Arabia’s top energy official said he was sure that the Organization of Petroleum Exporting Countries and its allies will extend production cuts.
Back home, traders will await consumer price inflation (CPI) and index of industrial (IIP) data slated for release on 12 June. According to Bloomberg analysts’ estimates, retail inflation for May is seen rising to 3.05% from 2.92% a month ago. IIP will be at 0.8% in April against -0.1% in March.
Traders also await the Union Budget, due 5 July, for fiscal deficit target and borrowing calendar for 2019-20.
The rupee weakened tracking a fall in other emerging-market currencies, and pulled down by the yuan after comments from China’s central bank governor last week signalled that Beijing may let the currency weaken. Analyst says US-China tariff war continues to exert pressure on global equities and emerging market currencies are expected to be hit.
So far this year, the rupee has risen 0.43% against the US greenback. During the period, foreign investors bought $11.32 billion in Indian equities and $706 million in debt market.
The benchmark Sensex index ended 0.43% higher at 39,784.52 points. Year to date, the index has risen 12%.