Prices of government bonds ended higher Thursday as state-owned banks likely bought after India's CPI inflation for May was lower than or in line with estimates of most traders, dealers said. But a few traders said the headline inflation was higher than their estimates of 2.5-2.7%. In the last hour of trade, bonds had given up some gains as core CPI inflation for May was higher than expectations, dealers said.

Most bonds that fell in the last hour of trade because of the high core CPI recovered by the end of trade on purchases by PSBs, dealers said. Moreover, some traders attributed the higher core CPI print to a low base effect and rise in gold prices. "We were expecting a 3.0% CPI print so this data is good only," a dealer at a private sector bank said. "The core CPI was on the higher side so that's why maybe market is falling, but the core was higher because of low base effect."