The trading activity in G-securities peaked to one-year high after RBI maintained status quo in its December MPC outcome hinting at a probable rate-reduction cycle from next year. The bond yield also was dragged to its lowest since April 13, 2018.
Also, the continuous OMC operation to maintain liquidity in the system is likely to maintain rally in the bond market with benchmark bond-yield declining to 7.25%. Last bond-yield was quoting at 7.396%. Bond yields and prices move in opposite directions.
The rate cut shall likely to be the case in the event when the inflation level is sustained at 4% as well as OMO maintain the rally in the bond market.
And with investors cheering the rally in bond market, trading activity is likely to continue at a higher rate in the coming days.