By Dharamraj Dhutia

MUMBAI, June 9 (Reuters) - Indian government bond yields jumped for a second consecutive trading session on Monday, as the central bank's surprise shift to a neutral policy stance and its outsized rate cut continued to nudge investors into cutting positions further.

The benchmark 10-year yield IN063335G=CC ended at 6.2837%, highest since May 13 and up from Friday's close of 6.2373%.

The five-year 6.75% 2029 bond IN067529G=CC yield ended at 5.8842%, compared with the previous close of 5.8150%.

"Indian government bond yield curve is expected to steepen further as short-term yields are likely to fall (more) while long-term yields may remain sticky for the time being," said Dhawal Dalal, president & CIO - fixed income - at Edelweiss MF.

Indian investors will opt for shorter-duration government bonds and swaps after the central bank policy decision, which also included a cut in banks' cash reserve ratio by 100 basis points to 3%, which will add to liquidity, investors said.

The Reserve Bank of India (RBI) delivered a larger-than-expected 50-bp rate cut on Friday, its steepest in five years, but changed its policy stance to "neutral" from "accommodative", stating that it may have limited space for further easing.

The RBI has cut rates by cumulative 100 bps so far this year.

The central bank is likely to keep rates on hold until at least the end of this fiscal year, a snap Reuters poll of economists found after Friday's decision.

Still, some brokerages including ANZ, Nomura and MUFG are is anticipating the RBI to cut rates by another 25 bps before end of 2025.

RATES

The shorter duration overnight index swap $(OIS)$ rate was little changed, while the longer end continued to say paying interest.

The one-year INR1YMIBROIS=CC OIS rate was flat at 5.48%, while the two-year OIS rate INR2YMIBROIS=CC was up 2 basis points at 5.46%. The most liquid five-year INR5YMIBROIS=CC was higher by 2 basis points at 5.70%.

(Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)

((Dharamraj.dhutia@tr.com))