Markets on Monday held ground against fears of rising US yields with the rupee and the Sensex clawing back some of their losses last week.

Equity benchmark indices Sensex and Nifty closed higher on Monday after two days of decline, while the rupee closed unchanged at 83.10 against the dollar after hitting an all-time closing low on Thursday at 83.14.

In a range-bound trade, the 30-share BSE Sensex climbed 267.43 points or 0.41 per cent to settle at 65216.09. During the day, it jumped 387.16 points or 0.59 per cent to 65335.82.

The NSE Nifty gained 83.45 points or 0.43 per cent to end at 19393.60.

"A rebound in the global market after a significant correction prompted buying in domestic equities, particularly within the IT sector. However, the potential for volatility to linger in the near term remains due to the increasing dollar index and elevated US bond yields, fuelled by concerns about rate hikes.

"Investors are keenly observing the commentary from the Fed chair during its forthcoming summer conference for interest rate insights," said Vinod Nair, head of research at Geojit Financial Services.

The rupee on Monday continued to be under pressure but closed unchanged against the dollar on support from the Reserve Bank of India (RBI). The domestic currency closed at 83.10 with experts being divided over its future course.

Last Thursday, the unit had settled at an all-time closing low of 83.14 on global strength of the greenback and rising US treasury yields.

That led to some experts saying that the rupee could breach the 83.50 mark if this trend continues and even approach 83.80 levels, subject to intervention from the central bank.

However, in the following two sessions, the currency has managed to hold its ground with dealers attributing it to intervention from the RBI.

They pointed out that the central bank is likely to protect the record intra-day low of 83.29 of the rupee that was hit in October 2022.

Meanwhile, the RBI is nudging local banks to ask their clients to settle trade between the UAE and India using the dirham or the Indian rupee to reduce US-dollar-based transactions, according to Reuters.

The move is part of the RBI's broader aim of promoting settlement in local currencies with countries with which India has a trade deficit, with the knock-on effect of boosting the rupee's global reach.