Market awaits Fed decision

The key 10-year government bond was dealt at 5.8432 per cent, compared with Tuesday’s close of 5.8435 per cent.

‘‘The market was broadly ranged ahead of the Fed. There are no other immediate factors to provide direction,’’ said a trader at a primary dealer. The outlook for US interest rates and the world’s largest economy will hit sentiment in bond markets around the world, including India, even though the Reserve Bank of India mainly weighs local factors when changing domestic rates.

Because interest rate differentials between India and the United States could have a bearing on capital flows, US rate hikes raise the possibility of domestic hikes.

The 10-year bond yield is up some 40 basis points from mid-June levels, and up nearly a percentage point from last October’s record low of 4.9442 per cent on growing concerns about rising domestic rates.

Traders are also waiting for Thursday’s auctions of bonds worth a total of Rs 80 billion for clues on market appetite and yield trends. On Friday, the government will release crucial inflation data. Then next week, it announces its budget, which will contain its borrowing plan for the year.

The market was little moved by news that the Indian economy had grown by 8.2 per cent in the January-March quarter over a year earlier, which was not significantly below expectations.