RBI to conduct open market operations of bonds worth Rs 12,000 cr

Due to this government bond yields are seen rising tomorrow

The Reserve Bank of India (RBI) will conduct an Open market operations (OMO) of government securities for an amount of Rs 12,000 crore on Monday.

Due to the move of absorbing liquidity by the central bank, government bond yields are seen rising tomorrow. "The yield on the 10-year benchmark bond could head towards 8.20%. However, overall sentiments in the bond market continues to remain positive and banks may continue buying bonds as credit off take is not that much," said Prasanna Patankar, deputy managing director at STCI Primary Dealer.

Patankar added that the expected rise in yields tomorrow is seen as a temporary phenomena. The auction is for four government bonds and it shall be conducted through multi-security auction using the multiple price method. The yield on the 10-year benchmark bond ended at 8.14% on Wednesday compared with previous close of 8.16%.