The need for and the use of different data assimilation techniques to improve the quality of streamflow forecast is now well established. In this paper, the goal is to demonstrate the power of a new class of methods known as the Forward Sensitivity Method (FSM) which is based on the temporal evolution of model sensitivities with respect to the control variables consisting of initial conditions and parameters. FSM operates in two phases: The first phase provides a simple algorithm for placing observations at or near where the square of forward sensitivities attains their maximum values. Using only this selected subset of observations in a weighted least squares method, the second phase then provides an estimate of the unknown elements of the control variables. In this paper, FSM based assimilation is applied to a simple class of two parameter model in a medium-sized agriculture dominant watershed lying in the Krishna River Basin, India. Four assimilation scenarios were tested to determine the effect of assimilating only sensitive observations as well as the impact of temporally evolving initial condition sensitivity. Sensitivity results showed that observations during the monsoon time alone are enough for assimilation purposes, which has helped in reducing the computational time greatly. Assimilation and forecast results also indicated that the scenarios which assimilated only sensitive observations are better in estimating daily streamflow. From the obtained results, it is concluded that FSM based assimilation has significant potential to improve the streamflow simulations, especially in places where data availability remains a major challenge.