The JP Morgan release, issued on Friday, said that the post cut rally in government securities, has still a long way to go. "The RBI reduced the bank rate, the repo rate and the cash reserve ratio by 1 per cent, 2 per cent and 0.5 per cent respectively to 8 per cent, 6 per cent and 10.5 per cent towards closing hours on March 1,1999", the report said.

According to the report, the markets have reacted with yields at the short end dropping by 60 basis points and at the medium term (3-5 years) by 15-20 basis points. "However if one goes by how markets behave in the past, this is only a very small partof the move", the trade note said.

The investement bank has said that in terms of magnitude, Monday's rate cut are equivalent to the March 18, 1998 and the April 2 1998 rate cuts taken together. A comparision of how markets behaved particularly the "on the runs" ones in these scenarios show that large part of the price rise is yet to come, the note said. The PD predicted that the next upward move in prices could come from one of the three events--the CRR inflow on March 13, the RBI putting up an aggressive priced OMO list, and in the run up to the April monetary policy.

"Going by the past the rally seen in the government bonds since March 1, 1999 is only a very small part of the potential rise. A much bigger move is probably yet to come. Again history shows that medium maturity bonds (3-5 years) offer superior holding period returns compared to the shorter and the longer dated bonds", JP morgan concludes.