Benchmark 10-year bond yield was at 8.32 percent, up 1 basis point from its close on Monday.
Total volumes on the central bank's electronic trading platform were slightly lower at 23.60 billion rupees ($478 million) compared to the normal 30-40 billion rupees dealt in the first two hours of trade.
"Market has been pretty ranged off late and will continue to be so until the borrowing meeting on Thursday. I expect the 10-year bond to hold in 8.25-8.40 percent band this week," the head of fixed income trading at a foreign bank said.
Central bank and finance ministry officials will meet on Thursday to decide the schedule of government borrowing for the second half of this fiscal year, a source with knowledge of the matter said on Monday.
New Delhi, which set a gross borrowing target of 4.17 trillion rupees ($84.2 billion) for 2011/12, has completed borrowing 2.5 trillion rupees between April and September.
Most market participants expect the government to raise its market borrowing by 300 billion to 700 billion rupees, depending on its fiscal performance. New Delhi's fiscal calculations were based on a low subsidy bill, high economic growth and higher proceeds from stake sales in state-run firms.
However, a slowdown in the domestic economy, high global crude prices and mounting global economic uncertainty amid a prolonged euro zone debt crisis that has roiled the world markets appear to have upset those calculations.
"Market seems to be expecting some additional borrowing but I think they will just announce the scheduled calendar and extra borrowing if any will be announced only post January," the foreign bank dealer said.
Bond market sentiment was also hurt by a fall in US Treasury prices and after brent crude rose above $105, as concerns over Europe's debt crisis eased temporarily and a weaker US dollar sparked buying of dollar-denominated assets.
In Asian trade, the 10-year US benchmark bond yield was at 1.91 percent, up 1 basis point from late New York trade on Monday.
The benchmark five-year Indian swap rate and the one-year rate were both up 1 bp each at 6.81 percent and 7.75 percent, respectively.
Euro zone officials are working to magnify the firepower of the region's rescue fund, European Central Bank policymakers said on Monday, while US President Barack Obama piled on pressure for Europe to staunch a sovereign debt crisis that threatens the world economy.
Copyright Reuters, 2011