The Indian sovereign bonds have witnessed a heavy sell-off across the curve on Thursday after the Reserve Bank of India (RBI) in its last monetary policy meeting of 2016 unexpectedly kept its key interest rate unchanged.

The yield on the benchmark 10-year bonds, which moves inversely to its price, rose 2-1/2 basis points to 6.43 percent, hitting highest in last three weeks, the yield on long-term 30-year note bounced 3 basis points to 6.91 percent and the yield on short-term 2-year note climbed 3-1/2 basis points to 6.27 percent by 07:10 GMT.

The Reserve Bank of India (RBI) kept the benchmark repo rate unchanged at the two-day bi-monthly policy decision, concluded Wednesday, based on an overall assessment of the macroeconomic conditions, with an objective of achieving stable consumer price inflation.

The RBI’s Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 percent. Consequently, the reverse repo rate under the LAF remains unchanged at 5.75 percent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.

The decision of the MPC remains consistent with the objective of achieving consumer price index (CPI) inflation at 5 percent by Q4 of 2016-17, while maintaining a medium-term target of 4 percent within a band of +/- 2 percent, while supporting growth.

Meanwhile, the benchmark 30-share Sensex is up 1.47 percent to 26,621, while 50-share Nifty is jumped 1.49 percent to 8,258 at 7:10 GMT.