The Sensex and Nifty ended marginally higher as stronger Asian shares and gains in oil retailing firms offset falls in lenders after the central bank temporarily hiked the cash reserve ratio to absorb the surge in deposits from the country's demonetisation drive.
The 30-share BSE index Sensex ended higher by 33.83 points or 0.13 per cent at 26,350.17 and the 50-share NSE index Nifty ended up 12.6 points or 0.16 per cent at 8,126.90.
Among BSE sectoral indices, realty index was the star-performer and was up 1.91 per cent, followed by power 1.74 per cent, FMCG 1.23 per cent and oil & gas 1.06 per cent. On the other hand, consumer durables index was down 1.2 per cent, banking 1.16 per cent and IT 0.15 per cent.
Top five Sensex gainers were Bharti Airtel (+5.53%), Adani Ports (+2.6%), ITC (+2.08%), ONGC (+2.07%) and Hero MotoCorp (+2.05%), while the major losers were SBI (-2.82%), ICICI Bank (-1.73%), TCS (-1.02%), L&T (-0.99%) and M&M (-0.95%).
CRR hike
The Reserve Bank of India had on Saturday asked banks to maintain a temporary incremental cash reserve ratio (CRR) of 100 per cent to absorb excess liquidity from the system after the government's move to withdraw larger banknotes sparked a surge in deposits.
The Nifty PSU Bank Index, an index of state-run lenders, fell as much as 4.43 per cent to its lowest since November 9 as the CRR move is likely to deprive banks of earning interest on funds parked with the RBI. The Nifty Bank index fell as much as 1.73 per cent.
Meanwhile, the benchmark 10-year bond yield rose as much as 15 basis points on the news.
“It (CRR move by RBI) is a short-term measure... Sentiment would remain weak,” said Gaurang Shah, vice president, Geojit BNP Paribas Financial Services.
Global markets
Oil prices tumbled on Monday on fears that producer countries may fail to agree an output cut, pressuring US stocks and the dollar as traders reversed their “Trumpflation” trade as weak oil prices would reduce pressure on US interest rates to rise.
That gave some relief to Asian shares, which had underperformed on worries about capital flight to higher-yielding USmarkets in the weeks since Donald Trump’s November 8 election win.