yields fell sharply in early trade on Monday after the Reserve Bank of India
unexpectedly cancelled its sale of bonds via open-market operation after market hours on Friday.
said on Friday it was withdrawing the OMO sale that was scheduled for Nov. 23 due to "recent market developments and based on a fresh review of the current and evolving liquidity conditions". As of 0340 GMT, the benchmark 10-yr bond
yield was down 8 basis points at 6.97 per cent, and is expected to trade in 6.92 per cent-6.97 per cent range, a dealer at a large state-run bank said.
The OMO sale of government securities was withdrawn due to "recent market developments and based on a fresh review of the current and evolving liquidity conditions", the RBI
said in a statement on Friday.
A dealer with a private bank , on Friday had said, "There will be a rally on Monday after the OMO news, but it won't sustain. Many traders have burnt their fingers already and they are not ready to keep buying."
Continuous OMO sales have been a key reason for the massive sell-off in the bond
market since June-end, in addition to concerns over inflation and fiscal discipline.