* Details of 150 billion rupee bond sale watched
* OMO seen easing deficit situation further - traders
By Archana Narayanan
MUMBAI, July 2 (Reuters) - Indian federal bond yields were flat as traders waited to see whether the central bank will hold additional bond purchases this week after a pause in the last amid improving liquidity conditions.
The RBI is set to announce the composition of its bond auction for Friday later in the day, and it might then make an announcement on any OMO, traders said.
Trading volume was at 117.25 billion rupees ($2.10 billion) lower than the average 170-180 billion seen in the recent trading sessions owing to a RBI settlement holiday on Monday for quarterly closing of bank accounts.
"OMO expectation is strong in the market despite cash deficit only slightly above RBIs comfort level. From here, the central bank can bring cash deficit under control by conducting a few bond buys" said Nagraj Kulkarni, senior rate strategist at Standard Chartered Bank.
The old benchmark 10-year bond yield ended flat at 8.38 percent. The 8.15 percent 2022 bond , the new benchmark bond, closed at 8.17 percent, 1 basis point lower on the day.
The hopes for OMOs come as the RBI has been sporadically intervening in the forex market as the rupee was seeing volatility last week after hitting a string of record lows against the dollar.
Though the central bank was seen as absent on Thursday, Friday and Monday, traders expect more interventions, which could spur more bond purchases to ease the impact on rupee liquidity.
Repo borrowings fell to 494.5 billion rupees on Monday, its fourth straight session below 1 trillion rupees.
Supply worries are weighing on the market. The government will sell 140 billion rupees of treasury bills and 150 billion rupees of bonds in the week.
One-year OIS rate and the five-year rate both rose 3 bps each to 7.81 percent and 7.23 percent respectively. ($1 = 55.8350 Indian rupees) (Editing by Anand Basu)