Indian shares were a touch lower on Tuesday after their recent rally to four-week highs. Market players widely expect a quarter-percentage point increase in US rates. Still, investors will watch for signs the Fed may accelerate its campaign of 'measured' increases. The 30-issue Mumbai share index eased 0.05 percent to close at 6,552.47 points on Tuesday. "The market is taking a breather, but I think we haven't done too badly compared to what's happened to the Hang Seng," said Amisha Vora, head of institutional sales at Prabhudas Lilladher.
Hong Kong's Hang Seng Index fell 1.05 percent on Tuesday, as traders eyed the likely US rate increase. Renewed buying by foreign institutional investors and strong corporate earnings results, along with the Indian government's decision to allow private pension funds to invest in stocks, had lifted the Bombay index to a four-week high on Monday.
Foreign funds bought a staggering net $204 million worth of Indian shares on Monday, taking net purchases in January to $281 million, according to data released by the market regulator.
Wariness ahead of the Fed meeting, as well as uncertainty ahead of a sale of government stock due in the next week, kept the local bond market subdued on Tuesday.
The yield on the benchmark 10-year, 7.38 percent bond ended at 6.7179 percent on Tuesday, a tad higher than Monday's close of 6.7012 percent.
The rupee firmed 0.03 percent to close at 43.70/71 per dollar on Tuesday. The dollar's modest gains elsewhere and the flat Bombay stock index pulled the rupee off early highs.
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