The BSE Sensex eased on Thursday after a 3-day rally as investor mood was dampened by another delay in sealing a bailout for debt-stricken Greece, which could slow down portfolio inflows.
Index heavyweights such as energy conglomerate Reliance Industries and ICICI Bank led the losses, after the main stock index climbed to its highest close in more than six months in the previous session.
Unitech fell as much as 5.2 percent after its telecoms partner Norway's Telenor (TEL.OL) said it would seek indemnity and compensation from the company following a court order to cancel licences held by the joint venture.
It later rebounded was up 1.6 percent by 10:40 a.m. at 32.35 rupees. Unitech said it was surprised by the compensation claim by Telenor and may consider legal action.
Sun Pharmaceutical Industries Ltd (SUN.NS) shed 2.9 percent to 540.90 rupees after it said Wyeth had claimed $960 million in damages from the company in a lawsuit. The drugmaker said it disagrees with Wyeth's overstated claims and would pursue all available legal options.
At 10:40 a.m. (0510 GMT), the main 30-share BSE index was down 0.35 percent at 18,137.87, with 15 of its components falling.
The benchmark, which climbed 2.6 percent in the past three sessions, is up more than 17 percent since the end of December, compared with a nearly 25 percent fall in 2011. Foreign funds have been net buyers of more than $4 billion of Indian shares this year.
I think there is a growing urge to book some profits and also the global markets are a bit softer, said Neeraj Dewan, director at Quantum securities in New Delhi.
But as long as liquidity is strong, it is difficult to make a case for a correction. There may be some volatility though, he said.
Reliance Industries, India's most valuable company with a nearly 10 percent weightage in the benchmark index, was down 2.4 percent, extending losses to a third straight day.
No.2 lender ICICI Bank (ICBK.NS) fell 1.2 percent to 969.50 rupees, paring a nearly 4 percent rise in the previous session. Top lender State Bank of India eased 0.2 percent, while the banking index was down 0.8 percent.
The 50-share NSE index was down 0.42 percent at 5,509.20.
In the broader market, there were 821 gainers for 549 losers on a total volume of about 387 million shares.
Asian shares fell on Thursday as another delay in cementing a crucial bailout for stricken Greece underscored how far Europe is from resolving a debt crisis that threatens the stability of the financial system.
STOCKS ON THE MOVE
* Power utility companies extended gains for a second session after the government directed state-run Coal India to sign long-term fuel supply agreements with private power producers.
Adani Power (ADAN.NS) was up 6.8 percent, Lanco Infra (LAIN.NS) rose 4.5 percent, Tata Power gained 4.3 percent and Reliance Power was up 1.1 percent.
* Kingfisher Airlines (KING.NS) was up 2.1 percent even after the troubled carrier reported a 75 percent increase in losses during the quarter to end-December.
TOP THREE BY VOLUME
* Lanco Infra on 34.3 million shares
* Unitech on 14.4 million shares
* IFCI Ltd (IFCI.NS) on 13.1 million shares