However, the rupee has continued to dip. It closed Wednesday's trade at 46.68/69 against Tuesday's closing of 46.61/63 against the dollar.

In the run-up to the closure of the IMD issue that raised $5.25 billion from October 21, medium- and long-term dated-stock prices have gone up by nearly Rs 2 in some cases. The 11.68 per cent 2006 now quotes at Rs 103.29 from Rs 102.68 on October 21. The 11.99 per cent 2009 is at Rs 103.97 (Rs 102.65).

Similarly, the 11.19 per cent 2005 to Rs 101.79 (Rs 101.40) with the 11.30 per cent 2010 at Rs 99.72 (Rs 98).

Says Credence Analytics' (India) director, Shafali Sachdev: "The expectation of an increase in liquidity due to IMD inflows should see yields fall... especially in the short- and longer dated-stock in the near future".

Yields on T-Bills have also fallen. Yield at the 91-day T-bill auction held by the Reserve Bank of India (RBI) on November 3 dipped to 9.26 per cent from the 9.79 per cent on October 20. The yield at the 182-day T-bill auction held on Wednesday was 9.80 per cent from the 10 per cent on October 21. Likewise, the yield at the auction of the 364-day T-bill held on November 1 was 10.26 per cent from the 10.42 per cent on October 18.

Says e-Mecklai's Chetan Gandhi (interest-rate market): "Bond prices will move up again. Though inflows in the ongoing fortnight (3-17 November) are just about Rs 4,000 crore, lower from the Rs 13,500 crore in the previous reporting cycle (October 20-November 3), rupee-inflows after the $5.25 billion IMD mop-up will come into the money market".

Mr Gandhi concurs with Ms Sachdev that bond prices did move up in anticipation of the IMD inflows, and will move up still further.

"Long-term papers like the 11.40 per cent 2008, 11.30 per cent 2010 and the 11.99 per cent 2009 are back in favour", said Mr Gandhi.

There is just one catch as far as a further up-tick in bond prices are concerned: auction-outflows, and the RBI's open market operations (OMO). On Tuesday, the RBI mopped up Rs 4,281 crore when it put the 11.75 per cent 2006, 11.90 per cent 2007 and the 11.43 per cent 2015 on its sale-window.

During the period coinciding with the IMD offering, auctions of RBI dated-stock have sailed through. Auctions of the 11.03 per cent 2012 on October 25 and the 11.99 per cent 2009 on November 6 for Rs 3,000 each saw an excess-response in the range of 8,000-9,000 crore: a clear indication of the liquidity in the system. This must be seen in the light of the RBI's mop-up of over Rs 4,000 crore through its OMO on Tuesday. Trades on the National Stock Exchange's wholesale debt segment have also perked up to Rs 2,000-2,500-crore levels from the 1,000-1,400 crore thereabouts in mid-October.