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The benchmark 10-year bond yield fell 5 basis points to 8.66 percent. Bond markets were closed on Tuesday for a local holiday.
The central bank said late on Monday it had deferred an auction worth 150 billion rupees ($2.42 billion) scheduled to be held on Friday after reviewing the government's cash position and funding requirement.
Meanwhile, data late on Monday showed consumer inflation eased to a three-month low in December as vegetable prices fell, giving some relief to policymakers struggling to contain price pressures as growth hovers at a decade low.
India is due to release wholesale inflation data later in the day.