The first OMO auction conducted by RBI worth ₹50,000 crore was fully subscribed and the cut-off came better than expected, supporting the uptrend in prices, it added.
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The open market operation (OMO) purchase of seven Government Securities (G-Secs) conducted by the Reserve Bank of India (RBI) on Thursday to infuse liquidity aggregating ₹50,000 crore into the banking system was fully subscribed. This came amid yields of G-Secs thawing in the second market.
The aforementioned OMO purchase auction is part of the liquidity injection measures announced by the RBI in its bi-monthly monetary policy review. It comes a day ahead of the weekly sale of two G-Secs aggregating ₹28,000 crore by the Government.
Thawing G-Sec yields, which tracked lower US Treasury yields, provided a favourable backdrop of the OMO auction, with the yield of the benchmark 10-year G-Sec (6.33 per cent GS2035) softening about 5 bps from 6.66 per cent to 6.61 per cent.
One more OMO auction for infusing ₹50,000 crore is scheduled on December 18th. This auction will be preceded by a USD/INR Buy/Sell Swap auction of $5 billion for a tenor of three years on December 16, 2025.
Venkatakrishnan Srinivasan, Founder & Managing Partners, Rockfort Fincap LLP, observed that the Indian government bond yields have swung sharply over the past few days, underscoring the market’s sensitivity to both domestic pressures and global cues.
The 10-year benchmark, which was trading around 6.51 per cent pre-policy, surged to nearly 6.66 per cent after the RBI’s rate cut, reflecting concerns around record rupee weakness, subdued FPI participation and the overhang of global tariff uncertainty, Venkatakrishnan said.
“The initial reaction made it clear that a 25-basis-point repo cut alone was insufficient to boost the bond market at a time when macro headwinds were intensifying. “What finally stabilised today’s market sentiment was the RBI’s follow-through action. As outlined in the policy, the central bank conducted a well-received ₹50,000-crore OMO purchase, injecting liquidity across a wide set of maturities while keeping the benchmark 10-year out of the basket to maintain market integrity,” he said.
Coupled with the US Federal Reserve’s own 25-basis-point rate cut yesterday evening —which pushed US Treasury yields lower—the domestic OMO provided much-needed breathing space for market participants.
10-year benchmark yield
As a result, the 10-year benchmark yield softened to around 6.61 per cent today, reversing part of the post-policy spike and signalling that investors are willing to re-engage when liquidity support is credible. Nuvama Wealth, in a report, noted that over the day, value-buying was witnessed tracking lower US Treasury bond yields after the US Fed Powell sounded less hawkish in the press conference amid a cut rate of 25bps.
The first OMO auction conducted by RBI worth ₹50,000 crore was fully subscribed and the cut-off came better than expected, supporting the uptrend in prices, it added.
Venkatakrishnan said: “The key question now is whether this relief will sustain. While the OMO has offered immediate comfort, structural pressures remain: the rupee is still at all-time lows, FPIs have not meaningfully returned, and global policy uncertainty continues to hover. These factors may keep upward pressure on yields unless domestic macro stability improves.
“For the moment, the combination of the Fed cut and RBI’s decisive OMO action has helped arrest Indian government bond yields for now.”
Published on December 11, 2025
