Indian bonds rallied on Friday after the central bank announced a $1.75-billion bond purchase and said it would not allow debt issued by state governments as part of a bailout scheme for power companies to hit markets.
The benchmark 10-year bond yield was down 5 basis points at 7.81 per cent, after falling as much as 10 basis points earlier.
The Reserve Bank of India had said late on Thursday it would purchase bonds up to Rs 12,000 crore ($1.75 billion) through open market operations on March 3.
In addition, the central bank said on Friday state governments would issue debt under the so-called UDAY scheme to banks under a private placement, thus keeping the bonds outside of markets. ($1 = 68.7000 Indian rupees)