Indian government bonds saw a slight recovery Tuesday as traders covered short positions after a steep selloff. Concerns over the U.S.-Iran conflict and its impact on India's oil imports and a weakening rupee are keeping markets on edge, potentially delaying interest rate cuts. Overnight swap rates eased as opportunistic buying emerged.

India's bonds likely to open muted as high oil prices and Treasury yields persist, impacting market dynamics.

Indian government bonds saw a slight recovery Tuesday as traders covered short positions after a steep selloff. Concerns over the U.S.-Iran conflict and its impact on India's oil…