The Reserve Bank of India's move to widen its third special open market operation (OMO) helped bonds rise on Friday but worries over a likely fiscal slippage and a surge in global crude prices capped the gains.

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The Indian central bank has offered to buy a wider range of papers at the latest auction as against just the benchmark 10-year at the first two OMOs, making it more attractive for participants.

The central bank announced its first ever special open market operation to simultaneously purchase and sell bonds in the market on December 19 to manage bond yields which had been rising despite five consecutive rate cuts.

Yields are down 25 basis points since the announcement of the first auction after having risen as much as 37 bps since the RBI shocked markets by keeping rates on hold on December 5.

"The fundamentals are turning adverse for the bond market but the RBI has managed to prevent yields from rising," said A. Prasanna, an economist with ICICI Securities Primary Dealership.

"It is good news for government and other borrowers but whether this equilibrium can sustain is doubtful."

The benchmark 10-year bond yield dropped as much as 3 bps to 6.48 percent on Friday and traders said they expected yields to stay capped at 6.55 percent levels in the near term despite broader economic concerns.

Brent crude futures jumped close to $3 to their highest since September after a U.S. air strike killed key Iranian and Iraqi military personnel, raising concerns that escalating Middle East tensions may disrupt oil supplies.

Market participants broadly expect the government to announce a 0.4 percent-0.6 percent slippage in fiscal deficit and that could result in 500 billion rupees -600 billion rupees ($6.97 billion-$8.37 billion) worth of additional borrowing.

Yields are expected to rise on the back of increased borrowing but traders expect the RBI to continue to manage yields at least until the budget, which is likely to be announced on February 1.

Consensus is for at least two more special OMOs before the end of the month.

"The RBI has got themselves into a situation where they cannot stop now. Yields will jump the day they stop. There is a way to manage the markets and the RBI now has to live up to the expectations that it has built," a senior debt trader at a private bank said.