G-Secs rally on RBI’s liquidity infusion announcement worth ₹2.90 lakh cr
2 min readGovernment securities (G-Sec) rallied on Wednesday following the Reserve Bank of India’s announcement of liquidity-boosting measures, resulting in a significant drop in yields.
The yield on the benchmark 10-year G-Sec (6.48% GS2035) fell by approximately 9 basis points to close at 6.54% compared to Tuesday’s closing level of 6.63%. The security’s price gained around 63 paise during the session.
Bond prices and yields share an inverse relationship, moving in opposite directions.
RBI Interventions
On Tuesday, India’s central bank unveiled two liquidity infusion measures: ₹2 lakh crore in open market operation (OMO) purchases of G-Secs and a $10 billion USD/INR three-year buy/sell swap auction.
These actions address recent liquidity deficits caused by advance tax and GST payments. Banking system liquidity stood at a ₹61,636 crore shortfall as of December 23, 2025.
V Rama Chandra Reddy, Head of Treasury at Karur Vysya Bank, noted that the combined ₹2.90 lakh crore liquidity infusion reassured market participants, sparking a sharp yield decline. The benchmark 10-year yield has dropped 16 basis points from Tuesday’s peak of 6.70%.
Market Reactions
Venkatakrishnan Srinivasan, Founder & Managing Partner of Rockfort Fincap LLP, highlighted how RBI’s credible liquidity signals triggered immediate market relief. “The bond market’s strong reaction underscores how yields respond to substantial liquidity measures,” he observed, while questioning the rally’s sustainability given previous tightening cycles.
“Following earlier OMOs, yields rebounded as liquidity contracted and global pressures intensified. Persistent rupee volatility, unresolved US trade policies, and growing market consensus that the current rate-cut cycle has peaked continue to fuel investor caution,” Srinivasan explained. He added that the quantitative significance of RBI’s latest intervention provided crucial near-term confidence in liquidity management.
Published on December 24, 2025
