India's headline inflation rate, measured by wholesale prices, hit a 10-month low, rising 7.24 percent in November from a year ago, compared with 7.45 percent in October.

"Today's move is essentially on the inflation number, and the 10-year yield could drop to 8.10 percent on Monday on rate cut expectation," said Ashok Gautam, global head of markets at Axis Bank.

If the 10-year yield drops to 8.10 on Monday, it would touch an over four-month low, last seen on July 26, as per Thomson Reuters data.

According to a new Reuters poll of 41 economists, the central bank is expected to keep interest rates on hold in its mid-quarter monetary policy review on Tuesday, but views are split on a cut in the cash reserve ratio (CRR).

Gautam expects the 10-year yield to rise to 8.18-8.22 percent next week if the central bank keeps rates and the CRR on hold.

The benchmark bond yield fell 2 bp to end at 8.14 percent. The bond yield shed 3 basis points during the week.

India's short-end 1-year OIS rate ended 4 bp lower at 7.62 percent while the benchmark 5-year OIS ended 1 bp up at 7.11 percent.

The RBI governor, Duvvuri Subbarao, had said in October there was a "reasonable likelihood" of further policy easing in January-March quarter when inflationary pressures are expected to cool off.

Before the release of inflation data, yields were in 1 bp band, although the central bank belied expectations of an announcement of open market operation (OMO) after market hours on Thursday.

Traders still expect an OMO announcement post market hours on Friday.