This comes despite the Rs 11,000 crore of surplus liquidity being sucked out by the open market operation (OMO) last Friday and the wholesale price inflation edging up.
The yield on the benchmark 7.27 per cent 2013 gilt could test the five per cent mark next week only to bounce back to the 5.03-5.05 per cent levels.
The benchmark has shaved off nearly nine basis points since the start of the week. It hit a record low of 5.0217 per cent on Thursday as investors built positions on expectations of a rate cut in the monetary policy review in early November.
Liquidity in the bond market should not be a problem this week. Banks have parked Rs 17,805 crore at the three-day repo window on Friday and this will re-enter the system on Monday.
On Monday, the central bank will sell loans of all states except Punjab for about Rs 6,500 crore. This auction will be followed by the central government
