OMO auction for G-Secs purchase fully subscribed; banks get ₹50,000 crore liquidity
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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.
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A liquidity infusion initiative by the Reserve Bank of India (RBI) drew strong participation as the central bank’s ₹50,000 crore open market operation (OMO) to purchase seven Government Securities (G-Secs) on Thursday was fully subscribed. The auction coincided with a moderation in G-Sec yields during secondary market trading.
This OMO purchase forms part of liquidity-easing measures outlined in the RBI’s recent monetary policy review. The transaction precedes a scheduled weekly sale of two G-Secs totaling ₹28,000 crore by the government on Friday.
Falling sovereign bond yields, influenced by declining U.S. Treasury rates, created favorable conditions for the auction. The benchmark 10-year G-Sec (6.33% GS2035) saw its yield decrease approximately 5 basis points from 6.66% to 6.61%.
Another OMO purchase of ₹50,000 crore is slated for December 18th, preceded by a $5 billion USD/INR buy/sell swap auction for three years on December 16, 2025.
Venkatakrishnan Srinivasan, Founder & Managing Partner at Rockfort Fincap LLP, noted the recent volatility in Indian government bond yields, highlighting market responsiveness to domestic and global economic signals. The benchmark 10-year yield had climbed to nearly 6.66% post-policy announcement from 6.51% earlier, reflecting concerns about rupee depreciation, limited foreign investment, and ongoing global trade tensions.
He emphasized that the yield stabilization resulted from coordinated central bank actions: “The RBI’s decisive OMO liquidity injection across multiple maturities—while strategically excluding the benchmark 10-year security—combined with the Federal Reserve’s simultaneous 25-basis-point rate reduction, provided crucial market support.”
10-year benchmark yield
The 10-year benchmark yield subsequently retreated to approximately 6.61%, partially reversing its post-policy increase and indicating renewed investor confidence amid liquidity assurances.
A Nuvama Wealth report observed active buying during the trading session, driven by declining U.S. Treasury yields following dovish remarks from Federal Reserve Chair Jerome Powell after the rate cut. The report also noted that the RBI’s fully subscribed OMO auction exceeded expectations regarding pricing, further bolstering bond prices.
Srinivasan cautioned that persistent macroeconomic challenges could limit sustained yield improvements: “Structural pressures including currency weakness, subdued foreign participation, and global policy uncertainty may continue influencing yields unless domestic conditions show stronger signs of stability.”
Nevertheless, analysts concur that the combined effect of international monetary easing and targeted RBI intervention has temporarily stabilized the sovereign debt market.
Published on December 11, 2025
