Benchmark 10-year bond yield was at 8.33 percent, down 1 basis point from Tuesday's close.
Total volumes on the central bank's electronic trading platform were lower at 14.6 billion rupees ($305 million) compared to the usual 35 billion to 45 billion dealt in the first two hours on a normal day.
"Some cues will emerge only after the FOMC (Federal Open Market Committee) meeting today evening. Until then the 10-year bond yield will hold in a 8.30-35 percent band," said Debendra Dash, a fixed income dealer with Development Credit Bank.
The Fed opened a two-day meeting on Tuesday that is expected to end with a decision to stock up on longer-term Treasury notes in a bid to boost a fading economic recovery.
US Treasury debt prices were steady to slightly higher on Tuesday as worries over the eventual fallout from the European debt crisis underpinned the safe-haven allure of US government debt.
In Asian trade, the 10-year US benchmark bond yield was at 1.95 percent, up 1 basis point from late New York trade on Tuesday. The yield was not far from 1.879 percent, hit last week, its lowest in at least 60 years.
"The conflict in play between domestic and global cues continues to stay valid, thus guiding consolidation at 8.30-8.40 percent (on 10-year bond)," J. Moses Harding, head of global markets at IndusInd Bank, wrote in a daily note.
"The domestic cues are neutral as there are expectations of peaking out of the rate hike cycle. But given RBI's priority of inflation over growth, we may need to be prepared for one more hike, with the repo rate peaking at 8.5 percent," he added.
India had raised rates last Friday for the 12th time since mid-March 2010 and signalled more was to come, confounding expectations that it was coming to the end of its tightening cycle and putting it at odds with global peers focused on reviving weak demand.
Traders broadly said global factors were likely to continue to support demand for bonds with recessionary fears in the euro zone and expectations of sustained loose monetary policy in the United States at least until 2013.
They were also eyeing global crude oil prices for cues on its impact on domestic inflation.
Brent crude futures slipped closer to $110, reversing from gains in the previous session after the International Monetary Fund warned that the United States and Europe could slip back into recession.
Traders will also take cues from the results due after 2:30 p.m. of a 100-billion-rupee ($2.1 billion) treasury bills sale.
The benchmark five-year swap rate was down 2 basis point at 6.90 percent, while the one-year rate was at 7.95 percent from 7.96 percent previously.
Copyright Reuters, 2011