Indian shares flitted between negative and positive territory on Tuesday as investors kept a cautious stance ahead of the three-day central bank policy meet, while gains in automobile stocks offset declines in telecom companies.
According to a Reuters poll of 65 analysts, two-thirds have said the Reserve Bank of India (RBI) would hold its repo rate, a surprise change of stance following the appointment of Shaktikanta Das as the central bank chief in December. The central bank will start its three-day policy meet later in the session.
The 'neutral' stance would be in line with Prime Minister Narendra Modi-led Bharatiya Janata Party's aim for a stimulative monetary policy ahead of national elections in May.
The RBI's mandate is to control price pressures, which historically have been difficult to tame in India.
However, analysts feel the possibility of a rejig in the indexes by global index provider MSCI Inc could impact some of the large cap players.
"If MSCI does an index rejig, then the weight of some of the stocks could come down," said Deven Choksey, founder, KR Choksey Investment Managers.
Companies in the American depositary receipts (ADR) and global depositary receipt (GDR) lists such as Tata Motors Ltd and Infosys Ltd could be affected, Choksey added.
Tata Motors was trading 2.1 percent lower, while Infosys slipped 0.9 percent.
The broader Nifty was up 0.02 percent at 10,914.55, as of 0605 GMT, while the benchmark Sensex was largely flat at 36,580.64.
Telecom bellwether Bharti Airtel Ltd fell as much as 4.5 percent after ratings agency Moody's Investor Service downgraded some of the company's notes.
Most automobile majors were in the green with Hero MotoCorp Ltd and Mahindra & Mahindra Ltd gaining 1.8 percent and 2.1 percent, respectively.
Consumer giant Hindustan Unilever Ltd was among the biggest boost on the NSE index, rising as much as 1.4 percent, while extending gains to a fourth session.
IT stocks such as Wipro Ltd dropped 0.8 percent, while Tech Mahindra Ltd, which is scheduled to report its quarterly results later in the day, fell nearly 1 percent.
Reliance Communications Ltd dived as much as 16.7 percent, a day after it sought fast-track resolution of its debt through the National Company Law Tribunal (NCLT), the country's court that deals with bankruptcy cases.