The dollar index was steady at 105.1 after dipping to a near one-month low on Friday after data showed that U.S. employers added fewer jobs than expected in April and the unemployment rate rose.
"With general elections in full swing in India, foreign investors have adopted a wait and watch approach, until the election results are out," Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Research India, said.
The rise in US Treasury yields presents a complex scenario for global equity markets, with India being no exception, says Wright Research s Sonam Srivastava.
In four trading sessions, Foreign Portfolio Investors (FPIs) offloaded Indian equities worth ₹20,000 crore as US bond yields climbed on expectations of the US Fed maintaining a tighter monetary policy, driven by a surge in March inflation figures and robust retail sales data.
The domestic currency closed at 83.44 per US dollar on Wednesday, sliding from 83.38 Tuesday. So far in 2024, the Indian currency has depreciated 0.3% against the US dollar.
The benchmark 10-year bond yield closed lower at 7.063% Tuesday from the previous close of 7.0968%, while 13 state governments collectively sold more than Rs 28,000 crore of bonds.
An important feature of the FPI flows in January this year was the divergent trends in equity and debt flows, analyst V K Vijayakumar who is Chief Investment Strategist at Geojit Financial Services said as he decoded the FPI trends.