Traders said the fall in global crude oil prices is raising expectations that domestic inflation may continue to remain subdued.
Some investors have even started betting on a 50-basis point rate cut in February and as much as 100 bps in all of 2015.
The benchmark 10-year bond yield was trading at 8.15 percent, after falling to as low as 8.14 percent, its lowest since Aug. 8, 2013.