New Delhi issued the advisory, which urges students to "take certain basic precautions in being alert to their own security", after 21-year-old accounting graduate Nitin Garg was stabbed to death in Melbourne on Saturday.
Australian Deputy Prime Minister Julia Gillard said the country had a low homicide rate.
"Australia is a very safe country," she told reporters.
"In big cities around the world we do see acts of violence from time to time; that happens in Melbourne, it happens in Mumbai, it happens in New York, it happens in London."
Police have said there is no evidence the attack was racially motivated but the killing has prompted wide press coverage in India, where one newspaper described the death as proof of "racist attacks on the Indian community."
Gillard said Australia would continue to welcome Indian students.
The murder, which follows a string of violent attacks against Indians that spilled over into streets protests in Sydney and Melbourne in 2009, threatens to damage Australia's $15.4 billion foreign export industry.
Indian students account for 19 per cent of total international enrolments in Australia, taking 117,000 places in the 12 months to October 2009.
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