Sushil Finance expects USDINR to trade positive on the back of US interest rate outlook and weak Indian economic data. The rupee retreated from 13-month lows after the central bank stepped up intervention, while bonds also recovered despite concerns over whether foreign funds will stick with India, one of the star performers this year among emerging markets.

Intervention from the Reserve Bank of India was larger than in recent sessions, traders said, with some estimating dollar sales of nearly USD 500 million. Meanwhile, buying of shares by state-run Life Insurance Corporation of India helped shares recover from earlier falls to trade flat, dealers added.

Analysts fear more foreign selling, but doubt it would spark turmoil anywhere similar to last year when India suffered its worst market crisis since 1991.

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