Bond market dealers watch out for RBI's unannounced purchases

It is hard to say if the OMOs are being done to soften yields, or to fill up the central bank's stock of bonds, but yields did not move up sharply in auctions

Bond market participants expect the Reserve Bank of India (RBI) to increase secondary market bond purchases, either pre-announced, or even unannounced, as a tool to contain yields. 

Bond yields have remained soft for the time being, largely due to the huge surplus liquidity in the banking system. The central bank, though, has also entered the bond market to pick up securities unannounced. It is difficult to say if this has been done to soften yields, or to fill up the central bank’s stock of the bonds, but the impact has been that yields did not move up sharply in auctions, and