At 10:50 a.m. (0520 GMT), the 10-year benchmark bond yield was steady at Tuesday's close of 8.26 percent. Traders expect the bond to move in a 8.23-8.27 percent band during the day.
Total volumes on the central bank's electronic trading platform were at a low 23.35 billion rupees ($525 million) compared with the normal 35 billion to 45 billion rupees dealt in the first two hours of trade.
The benchmark five-year swap rate and the one-year rate were both 1 basis point higher at 7.51 percent and 7.90 percent, respectively.
"I continue to expect the RBI to hike key rates by 25 basis points on July 26, though the market does seem confused over a hike or a pause," said Bekxy Kuriakose, head of fixed income at L&T Investment Management in Mumbai.
"Further rate increases would then depend on the incoming data points."
The Reserve Bank of India (RBI) is widely expected to raise its key lending rate by 25 basis points at its review, but is perceived by the market as being near the end of its tightening cycle with some traders also expecting a pause next Tuesday.
The RBI has raised rates 10 times since March 2010 to tame high inflation as price pressures remain strong, but signs of slowing growth have prompted investors to bet on a pause.
Industrial output rose at its weakest pace in nine months in May, the latest sign of slowdown for Asia's third-largest economy.
"Global factors are slightly negative bonds. But the Greece second bailout meet and the US debt ceiling developments will be watched for direction," a senior dealer with a foreign bank said.
Oil rose on Wednesday, supported by hopes of a US debt deal, a weakening dollar against the euro and tightening crude stocks in the world's largest oil consumer.
Long-dated US Treasuries prices fell in Asian trade on Wednesday as a rise in regional stocks prompted profit-taking following a jump in the previous day when President Barack Obama reported progress in talks to raise the US debt ceiling.
The benchmark 10-year US note was trading at 2.90 percent in Asian trade, up 2 basis points from late New York trade on Tuesday when it had fallen 5 basis points.
Copyright Reuters, 2011