MUMBAI, Dec 12 (Reuters) - India's overnight index swaps and government bond yields have climbed in the past week despite the central bank's recent rate cut and liquidity injection, as traders grow skeptical about further monetary easing.

The higher rates undermine the easy monetary setting, with the Reserve Bank of India slashing the policy repo rate by 125 basis points this year, holding a "neutral" policy stance and infusing $16 billion of domestic liquidity.

"Despite the dovish commentary, the market assumption is now the RBI easing cycle is over. Historically INR rates move notably higher after the last cut. So positions are getting stopped out, with year end exaggerating the move," Nomura Asia Rates Strategist Nathan Sribalasundaram said.

India's benchmark bond yield eased six basis points to 6.45% in a knee-jerk reaction to the policy on December 5. It has since jumped nearly 15 basis points.

Overnight index swaps, which are the closest indicator of interest rate expectations, have also risen, with the five-year rate up 17 basis points from last week's low.

A Reuters poll ahead of the December rate decision had expected a 25 basis-point cut followed by a pause.

The jump in rates is in part being driven by rising global bond yields. In the U.S., the 10-year Treasury yield has gained nearly 15 basis points this month.

"Global bond market is experiencing an upward trend in yields, fuelled by concerns over persistent inflation in some countries and fears of fiscal expansion in others," said Sameer Karyatt, executive director and head of trading at DBS Bank India.

"These combined factors have led to significant squaring in the India rates market positions, resulting in a noticeable spike in yields," he said.

CORPORATE FUNDRAISING HIT

Higher rates have led to some state-run companies withdrawing planned bond sales.

Power Finance Corp and SIDBI withdrew 115 billion rupees (about $1.3 billion) of bond sales this week, as bids were received at rates that were sharply higher than expected.

"Rising bond yields have forced the issuers to pull issuances rather than accept elevated borrowing costs," said Nikhil Aggarwal, founder & group CEO at Grip Invest, an online bond trading platform.

($1 = 90.4800 Indian rupees)

(Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala)

By Dharamraj Dhutia