Indian shares rise, bond yields steady ahead of RBI policy decision

* NSE index up 0.28 pct, BSE index 0.33 pct higher

* 10-year yields up 1 BPS

* Rupee weakens to 71.60 to the dollar

Feb 7 (Reuters) - Indian shares rose while 10-year bond yields edged up a basis point on Thursday, as investors awaited the central bank monetary policy decision.

The Reserve Bank of India, in its first meeting under the leadership of Shaktikanta Das, is expected to shift its policy stance to “neutral” from “calibrated tightening” and move towards a rate cut in April.

A softer stance could aid Prime Minister Narendra Modi’s government, which wants to boost lending and lift growth as it faces national elections by May.

Over two-thirds of 65 economists polled by Reuters predicted the RBI to hold its repo rate at 6.50 percent.

The 10-year benchmark government bond yield rose to 7.57 percent in early trade, from Wednesday’s close of 7.56 percent while the rupee weakened marginally to 71.60 to the dollar compared with its previous close of 71.56.

“With the tax incentives, farming boosts, there is a possibility of that translating to higher demand and consumption and I think the yields are showing that,” said Dhananjay Sinha, head-Institutional Research, Economist and Strategy at Emkay Global Financial Services.

“I see rupee weakening to 75 against the dollar in the next six to eight months because the U.S. economy is getting stronger and should attract more flows.”

The broader NSE index rose 0.28 percent to 11,093.9 as of 0520 GMT, while the benchmark BSE index was 0.33 percent higher at 37,097.26.

Both the indexes were on track to advance for a sixth straight session.

While gains in Reliance Industries Ltd and IT stocks have boosted markets, overall earnings haven’t been up to the mark. Margins have shrunk despite higher revenues, Sinha added.

Sun Pharmaceutical Industries Ltd was among the top gainers on the NSE index, rising as much as 3 percent after its U.S. unit Taro Pharmaceutical Industries posted strong December-quarter results.

Telecoms company Vodafone Idea Ltd jumped 7 percent after reporting a smaller-than-estimated quarterly loss.

Among decliners, JSW Steel Ltd slipped 2 percent after posting a 7.4 percent fall in quarterly profit on Wednesday. (Reporting By Arnab Paul in Bengaluru; Editing by Shreejay Sinha)