However, there was an element of caution ahead of January wholesale price inflation data, due on Thursday.
The resumption of bond purchases are easing worries about a liquidity deficit that has seen borrowings from the central banks repo window surge to one-month highs.
The benchmark 10-year bond yield closed 3 basis points (bps) lower at 7.84%. It fell to 7.83% in the session, a level last seen on Jan 29, the day the central bank cut policy rates.
As for the WPI data, a Reuters poll expects the WPI to hit a three-year low of 7%. If the headline and core numbers come in below expectations, trading may shift to the 7.75-7.85% range, said Bagla. Volumes remained a healthy R35,070 crore on the central banks dealing platform.