Indian government bonds traded in a narrow range early Tuesday, halting a three-session rally that had seen the benchmark 10-year yield fall by 7 basis points.
The benchmark 6.94% 2036 bond yield was flat at 6.8346%, reflecting a market in wait-and-see mode.
Market participants are holding back on new positions ahead of the Reserve Bank of India's upcoming policy decision.
The central bank's stance on interest rates remains the primary driver for fixed-income sentiment, with investors reluctant to commit to directional bets until the monetary policy committee signals its next move.
Compounding the caution is an expected increase in debt supply from Indian state governments.
Higher issuance typically puts upward pressure on yields, offsetting the buying interest that fueled the recent rally.