Yesterday bond market saw a good rally with yield on 10 year bond falling to 6.56. However same enthusiasm was not seen in the equity markets and it fell by almost 2%. Despite falling equities, INR did not see major weakness. This shows how bond market exuberance is shadowing equity markets. We also believe that Indian bond market could see good amount of USD inflows and that could offset any weakness in equity. For the month also debt market inflows are bigger than equity inflows.
US fed starts a day imp meeting. Market expects 25 bps rate cut. And all of it is priced in. US ten year has, in fact, now risen above 2% indicating next few rare cuts are priced in. Equity markets may see some weakness on growth worries in US and not rejoice interest rate cuts (already priced in)