RBI to conduct open market sale of govt bonds for Rs 10,000 crore

The yield on the 10-year benchmark bond dropped for a third consecutive session on Monday

Government bond yields are set to see corrections on Tuesday ahead of the close of market hours, as the Reserve Bank of India (RBI) announced an Open Market Operations (OMO) sale of government bonds for an aggregate amount of Rs 10,000 crore on Wednesday.

The yield on the 10-year benchmark bond had dropped for a third consecutive session on Monday, hitting a more than 14-month high on rising expectations of an earlier-than-expected rate cut by the central bank. The yield on the 10-year bond ended at 8.26 per cent on Monday compared with the previous close of 8.28 per cent.

During intra-day trades the yield had touched a low of 8.22 per cent, a trough touched earlier on August 12, 2013. Bond traders believe on Tuesday, the 10-year benchmark yield may trend near 8.30 per cent due to the OMO sale announcement.