Nifty seen opening lower after Wall Street's negative close

Moneycontrol Bureau

Indian shares may open somewhat deep in the red, as signalled by trading in the Singapore-based SGX Nifty, after US shares closed more than 1 percent lower overnight, the biggest drop in three weeks.

The flight to safety was triggered by renewed strength in the US dollar, which edged up to a one-month high against the euro, and as US inflation data and recent hawkish comments from Fed chair Janet Yellen indicated interest rates may rise sooner than expected.

Oil and gold prices traded soft, US treasuries rose, while US CBOE VIX spiked 16 percent.

In India, traders said volatility could be high, with expiry of monthly derivatives contracts slated Thursday. A couple of days of negative finish could result in Nifty closing nearer to 8,200. Bulls believe it would be important to hold the 8,300-8,350 level today.

The rupee could trade marginally weak while bond yields would likely take cues from the issue of a new 10-year benchmark bond to be auctioned Friday.