Sensex holds on to gains, HDFC Bank earnings eyed

MUMBAI (Reuters) - India's stock markets edged up on Monday as financial firms rose ahead of HDFC Bank's quarterly results later in the day but caution before of the derivatives contracts' expiry later in the week kept a lid on gains.

A small recovery in oil prices on account of a blizzard on the U.S. East coast also helped relieve some of the bearish pressure which drove Indian markets last week to levels seen before Prime Minister Narendra Modi was elected.

India's volatility gauge VIX, which measures the local market's expectation of volatility in the near term, fell 1.5 percent on Monday.

"We need to see fresh delivery to make a conviction call that we've seen the bottom," said Gaurang Shah, vice president at Geojit BNP Paribas.

"Volatility will be there, it's expiry week and a truncated one."

Indian equity markets will be closed on Tuesday on account of Republic Day.

The broader Nifty was 0.3 percent higher after rising as much as 0.87 percent earlier in the day to its highest level since Jan. 15.

The benchmark Sensex was 0.36 percent higher after gaining as much as 0.88 percent earlier.

HDFC Bank was trading 0.9 percent higher ahead of its quarterly earnings later in the day. ICICI Bank rose 1.6 percent, while Housing Development Finance Corp gained 1.55 percent.

Shares of Cairn India were up 5.3 percent after losing 5.6 percent last week due to volatile global crude prices.

SpiceJet gained 11 percent after reporting better-than-expected earnings for the December quarter on Friday.

Meanwhile, Axis Bank fell 2 percent after it issued a further clarification on its exposure to leveraged groups.

(Reporting by Karen Rebelo in Mumbai; Editing by Subhranshu Sahu)