The Reserve Bank of India's unexpected purchase of government bonds pushed down bond yields on Monday and raised bets for a cut in interest rates in February, investors said. The central bank's bond purchases accompanied daily overnight repo auctions.

The Reserve Bank of India (NSE:BOI) (RBI) has announced measures to increase liquidity in the banking system. These actions include open market bond purchases and a buy-sell swap forex auction.

The Reserve Bank of India on Monday said it will purchase government securities worth Rs 60,000 crore in three tranches and announced several other steps to inject liquidity into the banking system.As part of measures to manage liquidity conditions,

India's central bank announced on Monday a host of measures to inject liquidity into the banking system, including bond purchases and dollar/rupee swaps, which analysts and traders said could be a precursor to a rate cut next month.