The Bond Market expects the Reserve Bank of India to raise the repo rate by 35-50 basis points following its policy meeting this week, said reports. According to market experts, keeping in tandem with the hikes by the European Central Bank and US Federal Reserve recently.

Bond markets are not showing signs of nervousness, despite the buzz about another rate hike. Bond market participants say the RBI's action has already been factored in and therefore they don't expect anything big from the market.

Due to a focus on inflation over growth, the RBI has effectively raised rates the repo rate twice this year – by 40 bps in May and 50 bps in June. 100 basis points or bps is 1%.

April 2022. According to analysts, there will be two more hikes in repo rates in September and December - both of which will be 25bps. There is also the possibility of a change in stance to calibrated tightening, according to some economists.

An economist poll conducted by Reuters found that market participants are divided over the size of the rate hike. Participants are divided between 25 basis points and 50 basis points.

While inflation remained a concern, falling commodity prices and lower crude oil prices may bring in some stability, except market experts.

Since bond yields have fallen by over 25 basis points from their recent peak, most of this has already been priced in. In the months to come, Indian bond yields will likely trade in a tight range.

Also, fund managers report a significant drop in domestic liquidity over the past fortnight, averaging about Rs 1 lakh crore.

After rising to 7.25% in early trade, India's benchmark 10-year bond yield was at 7.23%. During the past nine sessions, the yield has fallen 25 basis points, closing on Tuesday at 7.19%.