  We present near-infrared spectroscopic and photometric observations of the
nova V5579 Sgr during the maximum and early decline phase. The spectra follow
the evolution of the nova from peak brightness when the lines had strong P
Cygni profiles to a phase dominated by prominent emission lines. The spectra
during the emission phase are dominated by strong H I lines from the Brackett
and Paschen series, O I and C I lines. The spectra in the final stages of our
observations show a rising continuum towards longer wavelengths, indicating
dust formation. Dust formation in V5579 Sgr is consistent with the presence of
lines of elements with low-ionization potentials like Na and Mg in the early
spectra. The early presence of such lines had been earlier suggested by us to
be potential indicators of dust formation later in the nova's development. We
also discuss the possibility of using P Cygni profiles to probe the properties
of the erupting white dwarf during the early outburst.
