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 India's benchmark bond yield posted its biggest single session drop in two weeks on Monday, after minutes of the latest monetary policy meeting were seen as dovish, calming fears of aggressive rate hikes.

The benchmark Indian government bond yield ended at 7.4075%, after closing at 7.4696% on Friday. It posted biggest single session fall since Oct. 4.

"There was a dovish turn from some members of the MPC (Monetary Policy Committee), which led to a rally today, and fall in oil is also helping, but beyond this point, I do not see room for any major fall in yields," said Ritesh Bhusari, deputy general manager for treasury at South Indian Bank.

The Reserve Bank of India's MPC may lean more on data in deciding the key interest rate going ahead, even as policymakers appeared divided on the future path of rate hikes, minutes of its September meeting suggested on Friday.

Two external members, Ashima Goyal and Jayant Varma, showed their preference for a tapering of the rate-hike cycle going ahead.

"A pause is needed after this hike because monetary policy acts with lags," Varma wrote in his minutes.

The MPC raised the benchmark repo rate by 50 basis points in September, the fourth straight increase to tame stubbornly high inflation. Retail inflation accelerated to a five-month high of 7.41% in September, its ninth straight reading above target.

Most analysts now expect the central bank to hike rate by 35 bps in December, while some also indicate the possibility of a pause after that hike.

Nomura said the minutes signal "some probability" that MPC may choose to undertake final rate hike in December and then pause. QuantEco Research, too, expects another 35 bps rate hike, before the central bank turned reactive rather than proactive, it said.

"We now expect the RBI to deliver a 35 bps rate hike at the December MPC to bring the repo rate to 6.25%, before shifting to a neutral stance," Rahul Bajoria, chief India economist at Barclays said.

With lack of any major domestic triggers in the near term, traders will continue to remain focused on movement in oil prices as well as U.S. yields, amid expectations that the Federal Reserve's target interest rate will peak closer to 5% in 2023