G-Sec yield spike: RBI advances OMO purchase auctions

The Reserve Bank of India (RBI) has rescheduled its open market operation (OMO) purchases of Government securities (G-Secs) to inject ₹1 lakh crore worth of liquidity into the financial system.

This decision follows a surge in G-Sec yields and insufficient liquidity within the banking sector. On 26 January, the banking system’s liquidity surplus stood at just ₹56,987 crore—well below the typical comfort range of ₹1.50-2.00 lakh crore.

The RBI will now conduct two tranches of ₹50,000 crore each for its G-Sec OMO purchase auctions on 29 January 2026 and 5 February 2026, shifting them forward from their original dates of 5 February 2026 and 12 February 2026.

The yield of the benchmark 10-year G-Sec (6.48% GS 2035) surged 6 basis points to 6.72%—an 11-month peak—compared to the previous close of 6.66%. In price terms, the security declined by roughly 42 paise.

Analysts note that despite the RBI’s monetary policy committee cumulatively cutting the repo rate by 125 basis points since February 2025 to 5.25%, the 10-year G-Sec yield remains elevated.

Contributing factors include rupee volatility, uncertainties around the India-US trade deal, and reports that Bloomberg Index Services may delay including India’s fully accessible route bonds in its Global Aggregate Index.

Market observers highlight fluctuations in the banking system’s liquidity throughout FY26, driven by rupee depreciation, advance tax outflows, and recurring GST-related drains.

This week’s pressure from bond supplies—including G-Secs and state development loans—has further dampened sentiment in the bond market.

Published on January 27, 2026