Indian shares edged up on Monday with
lenders being the biggest drag after the central bank
unexpectedly ordered banks to deposit their extra cash with it,
although overall sentiment was upbeat as Asian shares advanced.
The Reserve Bank of India on Saturday asked banks to
maintain a temporary incremental cash reserve ratio (CRR) of 100
percent to absorb excess liquidity from the system after the
government's move to withdraw larger banknotes sparked a surge
The Nifty PSU Bank Index, an index of state-run
lenders, fell as much as 4.43 percent to its lowest since Nov. 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 percent.
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.
The broader NSE index was up 0.17 percent at
8,127.85 as of 0602 GMT with Bank of Baroda and ICICI
Bank being the biggest losers.
The benchmark BSE index was 0.14 percent higher at
26,352.47 after falling as much as 0.51 percent earlier in the
Lenders were among the biggest decliners with State Bank of
India down 1.74 percent, while Bank of Baroda fell 2.47
However, oil retailers advanced after Brent crude futures
fell as much as 2 percent in early Asian trade,
following on from a 3.6 percent fall on Friday, as doubts arose
over whether the Organization of the Petroleum Exporting
Countries would reach a deal later this week.