The benchmark 8.40 per cent-2024 bond closed at Rs 103.2175 or at a yield of 7.8981 per cent today as against Friday's close of Rs 102.90 or 7.9465 per cent.
"Market is looking at a rate cut in June after Finance Minister said he expects RBI to cut rate," said a dealer with a state-owned bank.
"My expectation is the same as your expectation," he said when asked about what he expected the RBI to do in the June 2 policy review.
The Reserve Bank has cut repo rate, currently 7.5 per cent, twice in 2015 so far.
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In a note today Bank of America Merrill Lynch today said "We expect Governor Rajan to cut 25 basis points on June 2, pause to allow markets price in the Fed rate hike expected in September and then cut 50 basis points in early 2016."
"I think this (rise in 10-year bond price today) is a late reaction to the (CPI) inflation data. There is an increased possibility of a 25 basis points rate cut next month," said Harihar Krishnamoorthy, Treasurer at FirstRand Bank.