Indian shares see-sawed on Thursday as attempts to claw back after falling more than 5 percent this week faced headwinds, with investors worried high inflation would invite monetary tightening.
"The bulls appear to be cornered from all fronts," brokerage India Infoline said.
"The fiscal situation is also likely to worsen. Inflation is soon expected to hit double-digits," it said adding that any minor pull-back should be used to lighten positions.
At 11:46 a.m., the benchmark 30-share index was up 0.53 percent, or 81.46 points, at 15,596.25. The index opened 0.2 percent down, and fluctuated between losses of 0.4 percent and gains of 0.7 percent.
In the broader market, losers led gainers 1,376 to 917 on volume of 99.2 million shares.
On Wednesday, the government raised state-set petrol and diesel prices by about 10 percent, the biggest increase in 12 years, to curb losses at its state-owned refiners.
Analysts expect the move could lift India’s annual inflation to 13-year highs above 9 percent in early June, a Reuters poll showed, crimping consumer spend and delaying vehicle purchases.
The fuel price rise and inflation worries drove the index down 2.81 percent on Wednesday to its lowest close in two months, and took losses in 2008 to more than 23 percent.
Software stocks that get more than half their revenue from the United States rose in morning trade as the rupee weakened against the dollar, raising expectations for better earnings.
Bellwether Infosys Technologies was up 2 percent at 1,907.15 rupees, while No. 4 Satyam gained 2.8 percent to 499.05 rupees.
Top explorer Oil & Natural Gas Corp, which rose 5.3 percent on Wednesday, raced 3.9 percent to 921.80 rupees as the fuel price increase would lower the discount the state-run firm is forced to give state refiners.
Citigroup said it expects about 60 percent upside in ONGC’s earnings in fiscal year 2009.
Indian state-run oil retailers are partly compensated for selling fuel at low prices through government bonds and discounts by ONGC.
Analysts said the share of the compensation package for refiners by oil producers such as ONGC would come down to 18 percent from 33 percent.
Financial and property stocks fell in anticipation of tighter monetary policy, which would hurt their growth. No. 2 lender ICICI Bank dropped 0.7 percent to 752.50 rupees and smaller rival HDFC Bank fell 2.2 percent to 1,188.80.
Top listed real-estate firm DLF Ltd fell 3.4 percent to 536.40 rupees.
The broader 50-issue NSE index was up 0.69 percent at 4,617.25.
Elsewhere in the region, Karachi’s 100-share index was down 0.21 percent at 13,061.92, but Colombo’s All-share index gained 0.79 percent to 2,511.47.
STOCKS ON THE MOVE
* Top utility vehicle and tractor maker Mahindra & Mahindra was down 1.1 percent at 562 rupees, with higher fuel prices expected to crimp demand in the near term. The company said on Thursday it had agreed to buy Italy’s Engines Engineering SpA.
* Tanla Solutions Ltd was up 4.4 percent at 270 rupees after it said its unit had bought a Finland firm for $18.6 million.
TOP THREE BY VOLUME
* IFCI Ltd on 4.4 million shares
* Anu’s Laboratories on 3.8 million shares
* Gokul Refoils on 3.5 million shares
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