The BSE Sensex was trading down but off early lows in choppy trade Friday, with property developers and retailers rallying after the government opened the supermarket sector to global giants.
Export-driven software services companies such as Infosys and TCS were among the top losers, falling more than 1 percent each, on worries a worsening global economy could hit their earnings. Energy major Reliance Industries, which is also a big exporter of petroleum products, fell 1.2 percent.
By 12:01 p.m. (0631 GMT), the main 30-share BSE index was down 0.37 percent at 15,797 with 21 of its components in the red. The benchmark had slid as much as 0.9 percent early before pulling into positive territory briefly.
Traders said selling by foreign institutional investors (FIIs) in recent sessions, which had pushed the main index to a two-year low this week, and subdued world markets weighed on investor sentiment.
People are very skeptical if the market will be able to sustain even at the present levels, said Deven Choksey, chief executive at K R Choksey.
FIIs have pulled out $632 million over four sessions to Wednesday, data from the market regulator showed.
Shares in Pantaloon Retail (India) jumped as much as 18.2 percent, Shopper's Stop rallied 15 percent and Trent, part of the salt-to-steel Tata Group conglomerate, rose 17.2 percent after India liberalized the sector raising hopes for tie-up with big global giants.
The government Thursday approved 51 percent foreign direct investment in the supermarket sector, paving the entry of firms such as Wal-Mart, Tesco and Carrefour into one of the world's largest untapped markets.
Property developer DLF rose as much as 6 percent on hopes foreign investment in multi-brand retail would bring big-ticket projects for real estate players. Shares of Phoenix Mills rose more than 11 percent, while Sobha Developers and Peninsula Land rose 5 and 6 percent each.
State-run engineering firm Bharat Heavy Electricals rose 4.3 percent after Nomura upgraded to stock to 'buy' from 'neutral', citing incremental positive news flow starting to emerge and attractive valuations. Engineering and construction conglomerate Larsen and Toubro was up 4.1 percent, rising for a second day, as investors chased bargains. The stock had fallen to a more than two-and-a-half-year low Wednesday.
The 50-share NSE index was down 0.37 percent at 4,738.75. In the broader market, there were 2.5 gainers for every loser on volume of about 213.9 million shares.
The MSCI's measure of Asian markets other than Japan was down 1.44 percent.
STOCKS THAT MOVED
* Ranbaxy Laboratories climbed as much as 4 percent as the launch date for its generic version of Pfizer's $10-billion-a-year cholesterol lowering drug Lipitor nears. Lipitor's patent expires Nov. 30.
* Future Ventures India Ltd rose 2.3 percent after the firm said it had made additional investments in Clarks Future Footwear Ltd and Holii Accessories Pvt Ltd.
* Jet Airways, Kingfisher Airlines and SpiceJet rose more than 5 percent each after the Mint newspaper reported that Prime Minister Manmohan Singh had called the heads of carriers for a meeting Saturday to discuss ways to help the cash-strapped industry.
TOP 3 BY VOLUME
* Suzlon Energy on 12 million shares
* Kingfisher Airlines 10.98 million shares
* Parsvnath Developers on 0.7 million shares