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The benchmark 10-year Indian government bond yield may have already peaked, according to market strategists who say the Reserve Bank of India's impending shift away from tackling inflation back to supporting the economy is not far off.

While India's government debt markets have remained relatively calm compared to other major sovereign debt markets, yields are still over 75 basis points higher so far this year, the biggest year-to-date rise since 2017.

Currently around 7.26%, India benchmark yields have only partially tracked the 190 basis points of repo rate tightening delivered by the RBI since May.

The repo rate currently stands at 5.9%, and according to a poll published by Reuters last month the RBI's hiking campaign will have run its course by the first quarter of 2023.

The 10-year yield will rise marginally to 7.43% in six months, below its three-year high of 7.62% set on June 16, according to the median forecast from a Reuters poll of 22 analysts taken Nov. 7-10.

Less than a third expected it to rise past this year's high at some point during the coming year.

"Fiscal risks remain contained, domestic inflation is likely to moderate going forward and the RBI's terminal rate close to 6.50% has already been priced in," said Sakshi Gupta, principal economist at HDFC Bank.

She expects the 10-year yield to trade in a range of 7.35-7.50% during coming months.

But she added that "any indication of a higher terminal rate in India or in the U.S...and upside surprises on inflation could push the yield up to 7.60%."

Indian consumer price inflation likely slowed in October to 6.73% but remained stubbornly well above the 6% upper limit of the RBI's tolerance band, a separate Reuters poll predicted.

The rise in India yields so far this year has been mild compared with the yields on U.S. 10-year treasuries, which have risen by over 230 basis points, as the U.S. Federal Reserve has raised its policy rate more aggressively than the RBI.

Strategists said that the Indian benchmark yield after rising over the next six months would fall back to 7.25% in a year's time.

Asia's third-largest economy was expected to grow well below its potential over the next two years, and highlighting that concern, the spread between yields on two- and 10-year government bonds narrowed to its lowest since 2019 recently.

A few strategists warned the spread might turn negative, which in the U.S. is a reliable sign of an impending recession.

"An inversion doesn't actually reflect a recession, but it does highlight the Indian economy will slow significantly over the coming months," said Kunal Kundu, India economist at Societe Generale.

"It will slow down drastically next year, but 4-5% growth in a country like India is actually a recession."

Some fund managers share similar concerns, worrying foreign investors were unlikely to enter the Indian government debt market, despite attractive valuations. Foreign investors so far this year have sold nearly $2 billion in Indian debt.