Rally in bond markets lasted just hours after analysts decoded RBI bonanza

Yields on the benchmark 10-year note ended five basis points higher at 6.53% on Tuesday

A rally in India’s bond markets after a record fund transfer from the central bank to the government lasted just hours.

Yields on the benchmark 10-year note had dropped as much as 13 basis points on Tuesday on speculation that the government will cut back on borrowings after the Reserve Bank of India said it will give Rs 1.76 trillion ($24.6 billion). By the end of the day, traders were selling the debt.

The flip came as some analysts started breaking down the components of the payment, and focused on the Rs 52,600 crore surplus capital getting transferred. That amount