Rupee closed steady, bonds higher

The spot rupee ended flat at Rs 44.13 against its previous close of Rs 44.12.

The  widely traded 8.07%, 2017 paper closed higher at Rs 101.80 against its previous close of Rs 101.81.

The bonds ended higher as banks and primary dealers step up investments cheered by the auction cutoff after a 4-day selloff. Sentiment boosted as liquidity improved.

Nilesh Shah, CIO of Prudential ICICI spoke exclusively on CNBC-TV18:

Q1: Given this kind of an inflation number what are you expecting from the RBI, is it CRR hike and when?

A: I think its too early to take a call on inflation right now, certainly the times are not good. The numbers are coming little bit ahead of market expectations. Like today people expected Base Index to move up by 10 basis points but it moved up by 30 bps. So inflation number is coming a bit ahead of market expectation but we are in for the arrival of the Rabi crop and that could bring primary goods prices down.

So my suspicion is that probably RBI will provide little bit of extra time for inflation number to come down to its range of 5-5.5% and if they don’t see that happening by mid March or end March then they would like to take the action from the monetary policy stand, by way of reducing liquidity by way of CRR hike or by way increasing rates, by way of rising repo rate, whatever is necessary to cut down inflation number. They will probably give some time and then take action.