The 10-year benchmark bond yield fell as much as 9 basis points to 7.34 per cent from levels just before policy announcement. The 10-year yield had closed at 7.41 percent on Monday.
Bonds gained also as the central bank separately announced bond purchases under the open market operation for Rs 15,000 crore ($15.13 million) on April 7.
The benchmark BSE Sensex fell 0.65 per cent.
The rupee strengthened marginally to 66.09/10 per dollar compared with 66.12 before the announcement. The rupee had closed at 66.1975/66.2075 on Monday.