India's central bank announced on Monday a host of measures to inject liquidity into the banking system, including bond purchases and dollar/rupee swaps, which analysts and traders said could be a precursor to a rate cut next month.

The Reserve Bank of India (NSE:BOI) (RBI) has announced measures to increase liquidity in the banking system. These actions include open market bond purchases and a buy-sell swap forex auction.

The Reserve Bank of India's unexpected purchase of government bonds pushed down bond yields on Monday and raised bets for a cut in interest rates in February, investors said. The central bank's bond purchases accompanied daily overnight repo auctions.