Reuters Market Eye - The benchmark 10-year bond yield falls 1 bp to 8.73 percent as U.S. crude oil futures settled at their lowest point in five months on Tuesday, pressured by forecasts of rising supplies and continued weak demand.
However, rise in yields could be capped as U.S. Treasury yields rose on Tuesday as stronger-than-expected U.S. service sector data renewed the debate about the timing of the Fed tapering.
The differential between U.S. Treasury yields and domestic ones are seen as a driver of domestic bonds.
Traders are also looking ahead to an auction on Friday when the Reserve Bank of India will sell 150 billion rupees of bonds, according to a statement on Tuesday.
The range for the 10-year bond during the day is seen between 8.69 and 8.75 percent, two dealers say.
(Reporting by Abhishek Vishnoi)