MUMBAI: Indian shares pared most of their early gains to trade marginally higher on Monday, as the central bank held a board meet to discuss several issues related to liquidity, lending rules for banks and handing over surplus reserves to the government.
This is the first meeting to be held since the extent of a deep rift between the RBI and the government became public.
The Indian government is pressing the Reserve Bank of India (RBI) for easing of lending and capital rules for banks, providing more money to non-banking financiers, financing support for small businesses and giving the government greater access to surplus reserves the RBI has built.
New Delhi and the RBI are getting close to ironing out some of their policy differences, two sources told Reuters last week, as they seek to defuse tensions that had threatened to unnerve investors.
The broader NSE Nifty was up 0.26 per cent at 10,710.45 as of 0637 GMT, while the benchmark BSE Sensex edged up 0.35 per cent to 35,581.42.
The major thing to look out from the meeting is if they come out with any respite for non-banking financial companies' liquidity situation, said Saurabh Jain, assistant vice-president-research at SMC Global Securities.
Also, one would look at how many banks can come out from the prompt corrective action as per government's wishes and what RBI can do towards that, apart from the issue of surplus reserves held by the central bank, he added.
"Markets have also gained ground on stability in oil prices and negativity coming from institutional selling looks to be over as they are moving to the buy side," Jain said.
Realty and metal stocks gained, with Nifty realty index and Nifty metal index up 1.8 and 1.3 per cent, respectively.
Hindalco Industries Ltd and Vedanta Ltd rose as much as 3.2 and 2.9 per cent, while Oberoi Realty shares gained up to 6 per cent.
Yes Bank Ltd was the top percentage gainer on the Nifty, with shares rising as much as 7.1 per cent, in their biggest daily gain in nearly three weeks.
Among the gainers, Tata Investment Corp's stock jumped 7.9 per cent to its highest level since June 20 after the company approved a share buyback the proposal.
Meanwhile, Jet Airways India Ltd's stock plunged 12.5 per cent, posting its biggest daily fall since Aug 10, after Tata Sons Ltd said on Friday it is only in preliminary talks with the struggling carrier but has not made a proposal to acquire a stake.