The Reserve Bank of India (RBI) is expected to keep interest rates unchanged for the second time in six weeks on Tuesday, with Governor Raghuram Rajan expected to strike a hawkish tone on inflation that is easing but remains high.
Investors are worried that rates will stay high for longer after a RBI panel last week proposed revamping the way monetary policy is made, including using consumer prices as a benchmark for targeting inflation.
Bank shares are among the top gainers in early trades with ICICI Bank, SBI and Axis Bank are up over 1%.
In the auto pack, Tata Motors, Maruti Suzuki, Bajaj Auto and Hero MotoCorp were up 0.4-1%.