The BSE Sensex trimmed early gains on Friday as growth worries resurfaced, while mobile operators fell on rule changes that could hurt their earnings.
Brokerage CLSA cut its forecast for the country's GDP growth to 6.7 percent for 2011/12 from its earlier projection of 7.3 percent, citing cyclical deceleration caused by high interest rates, policy inertia and the adverse impact of global headwinds.
On Thursday, the Reserve Bank of India governor said the economy is poised to miss the central bank's growth forecast of 7.6 percent for 2011/12 and the inflation outlook is uncertain.
We are likely to see topsy-turvy trade today, with no clear direction, said Arun Kejriwal, strategist at research firm KRIS. There is a possibility that we could correct and give up some of the gains made over the last two days.
At 10:43 a.m. (0513 GMT), the main 30-share BSE index was up 0.31 percent at 15,862.38, with 16 of its components in the green. It rose 0.6 percent in early trade and then briefly dipped into negative territory.
The index gained more than 4 percent in the past two days on short covering, but is down nearly 11 percent since the beginning of November.
Telecom carriers Bharti Airtel (BRTI.NS) and Idea Cellular (IDEA.NS) fell more than 1 and 2 percent respectively after the telecoms ministry said carriers would not be allowed to offer 3G services outside their licensed zones through roaming agreements with each other.
ABB Ltd, a unit of Swiss engineering group ABB (ABBN.VX), rose 4 percent after its parent booked an order worth more than $900 million from Power Grid Corporation (PGRD.NS) to supply a transmission system.
Energy giant Reliance Industries (RELI.NS), which has the heaviest weighting on the main index, rose 1.6 percent.
The 50-share NSE index was up 0.38 percent at 4,751.75.
In the broader market, there were more than two gainers for every loser on volume of 163.6 million shares.
Asian stocks edged up on Friday, as signs of a strengthening economy in the United States encouraged a modest year-end rally in riskier assets.
STOCKS ON THE MOVE
* Monnet Ispat and Energy (MNET.NS) rose as much as 8.65 percent to 389 rupees after the company's board decided to buy back shares at a price of up to 500 rupees a share. The company said it would spend 1 billion rupees for the buyback.
* Suzlon Energy rose more than 3 percent after the wind turbine maker got new orders worth 9.35 billion rupees.
TOP THREE BY VOLUME
* Suzlon Energy on 6.78 million shares
* Jaiprakash Associates (JAIA.NS) on 5.03 million shares
* IFCI (IFCI.NS) on 4.03 million shares