The de-escalation of the fighting suggests negotiations are ongoing between the armed forces and rebels
Modi, breaking silence over the violence, said it was important that calm be restored to the capital city of more than 18 million people.
"Peace and harmony are central to our ethos. I appeal to my sisters and brothers of Delhi to maintain peace and brotherhood at all times," he said in a tweet.
The sectarian violence in a mixed neighbourhood of Delhi, which coincided with a visit to India by US President Donald Trump, erupted between thousands demonstrating for and against the new citizenship law introduced by Modi's Hindu nationalist government.