Sensex, Nifty Seen Lower As US Yields Climb

Indian shares are seen opening lower on Tuesday amid worries about inflation, higher interest rates and rising Covid-19 cases across the world.

Foreign institutional investors (FIIs) net sold shares worth Rs 124.23 crore on Monday, while domestic institutional investors (DIIs) net bought shares worth Rs 481.55 crore in the equity market, NSE data showed.

Analysts say that capital inflows into India will continue amidst expectations of inclusion in global bond index. Traders await retail inflation data for December due on Wednesday for near-term directional clues.

Benchmark indexes rose over 1 percent each on Monday to extend gains for the second straight session while the rupee rose by 0.4 percent to close at 74.04/05 per dollar, marking a two-month closing high and the biggest single-day gain since Dec 30.

Asian stocks were mostly lower this morning, reflecting lingering concerns about the economic impact of the Omicron variant of the coronavirus and the likelihood the Federal Reserve will raise interest rates in the near future.

Fed funds futures have priced in an almost 90 percent chance of a rate hike in March and a more than 90 percent chance of another one by June.

Oil resumed its upward trend after two days of losses. The dollar held steady and gold was muted ahead of key US inflation data as well as a Senate hearing on Fed Chair Jerome Powell's renomination.

In his prepared opening remarks, released Monday, Powell acknowledged that high inflation is taking a toll on American families.

Bitcoin recovered to around $42,000 after dipping below $40,000.

U.S. stocks succumbed to an early sell-off before ending mixed overnight as rate hike bets lifted the 10-year Treasury yield to a two-year high.

The tech-heavy Nasdaq Composite tumbled as much as 2.7 percent before finishing marginally higher as yields pulled back off their highs. The S&P 500 slid 0.1 percent and the Dow dropped half a percent.

European stocks closed Monday's session lower amid Omicron and rate hike worries. The pan European Stoxx 600 declined 1.5 percent.

The German DAX lost 1.1 percent, France's CAC 40 index tumbled 1.4 percent and the U.K.'s FTSE 100 shed half a percent.

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