MUMBAI - Indian government bond market participants suspect that Deposit Insurance and Credit Guarantee Corp (DICGC) made large purchases at a primary debt auction on Friday, traders said.

The Reserve Bank of India on Friday sold 140 billion rupees ($1.70 billion) of benchmark 7.26% 2033 bond at cutoff yield of 6.977%, and 80 billion rupees of 7.06% 2028 bonds at 6.8870%, which was slightly lower than estimates.

"Though most of the money is likely to have gone in the 10-year papers, some purchase in the five-year note can also not be ruled out looking at the price action," a trader with a private bank said on condition of anonymity.

Market participants speculate that RBI subsidiary DICGC, which provides insurance cover on bank deposits, must have bought bonds worth around 30 billion to 50 billion rupees.

"DICGC generally receives inflows from banks by end of May and aims to invest these funds in government securities market in June," said a senior treasury official at a state-run bank.

The company did not immediately reply to a Reuters email seeking comment.

DICGC covers all the commercial banks including the branches of foreign banks functioning in India, local area banks, co-operative banks and regional rural banks.

Market participants also said DICGC may also look to buy other liquid 7.41% 2036 bond in the coming days through the secondary market or at next Friday's debt auction.

Meanwhile, some traders also said the entity had likely bought about 10 billion to 20 billion rupees of benchmark bond in secondary trading on Thursday.

($1 = 82.3372 Indian rupees)

(Reporting by Dharamraj Dhutia Editing by Shinjini Ganguli)