(Updates for market open) By Dharamraj Dhutia MUMBAI, Oct 28 (Reuters) – Indian government bonds were barely changed in early deals on Tuesday, as expected, as traders looked for monetary cues from the state debt sale later due later in the day and the U.S. central bank's monetary policy decision due a day later. The yield on the benchmark 10-year note was at 6.5418% as of 10:00 a.m. IST, after ending at 6.5464% on Monday, its highest closing level in a month. Bond yields move inversely to prices. Indian states will raise 178 billion rupees ($2.03 billion) through the sale of bonds on Tuesday, with the quantum sharply lower than the previously determined 309 billion rupees, according to the calendar. "Today and tomorrow are likely to be low-volume days, and with the yield at levels where they are, we do not expect any large breakout on either side," trader with a primary dealership said. The benchmark bond yield is in touching distance of breaking the key level of 6.55%-6.56%, but traders do not expect the yield to breach this in the near future. Position cutting and short selling, witnessed last week, spilled over to Monday amid expectations that India and the U.S. may strike a trade deal that lowers the United States' tariffs of up to 50% on Indian goods. A reduction in tariffs could have a much smaller impact on the growth trajectory, potentially limiting future rate cuts. The Indian economy will grow slightly faster than previously expected this fiscal year, a Reuters poll showed, with GDP growth forecast to average 6.7%. The Reserve Bank of India had earlier hinted that it could cut the repo rate one more time in December, after delivering 100 bps of cuts in 2025. RATES India's overnight index swap rates were also unchanged tracking bond yields and awaiting fresh triggers. The one-year OIS rate was at 5.46% and the two-year OIS rate was at 5.41%. The five-year swap rate was at 5.66%. ($1 = 87.8950 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Eileen Soreng and Janane Venkatraman)
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