The path for Indian rupee and government bonds this week hinges on the geopolitical fallout from the militant attack in Kashmir, traders said.

A day after the U.N. appealed for restraint following Tuesday's deadly attack in Indian-administered Kashmir, India reported an exchange of fire across the de facto border in the disputed region.

The nuclear-armed rivals ramped up tit-for-tat diplomatic offensive following a deadly attack on tourists in Pahalgam.