The BSE Sensex was on track for its second weekly fall in a row as the market seesawed on Friday after a muted response to a government stake sale in Oil and Natural Gas Corp (ONGC.NS) raised concerns about divestment programmes.

ONGC, the country's biggest oil producer and second largest company by market value, fell as much as 4.2 percent after a $2.5 billion government share auction in the state-run company failed to get full subscription.

Investors bid for 98 percent of the 427.7 million shares on offer, in what is seen as a setback for the government at a time when it is trying to revive its divestment programme to bridge a widening fiscal deficit.

Definitely this is not a happy state of affairs, said K.K. Mital, a fund manager at Globe Capital Market in New Delhi. I think it will have an impact on the further divestment programmes the government is planning.

At 11:21 a.m. (0551 GMT), the BSE Sensex was up 0.29 percent at 17,634.70, with 19 of its components rising. The index opened 0.5 percent higher, but quickly turned negative and fell as much as 0.5 percent before recovering.

On the week, it is down 1.6 percent, after losing 2 percent in the previous week. The benchmark, however, is up 14 percent so far in 2012.

Top engineering company Larsen & Toubro (LART.NS) and the country's most-valuable company, Reliance Industries (RELI.NS), led the gains in the main index. Larsen rose 1.8 percent, after falling 2.3 percent in the previous session.

Reliance, which accounts for a tenth of the main index's weightage, was up 0.6 percent.

ONGC was down 2.1 percent at 282.10 rupees after hitting 276.20, below the 290 rupees floor price for the auction.

DLF Ltd (DLF.NS), India's biggest listed property developer, fell 4.1 percent to 205.25 rupees, extending the previous day's losses after Canadian investment research firm Veritas said the stock was worth about 100 rupees in a best case scenario.

DLF termed the report as presumptive and mischievous.

The 50-share NSE index was up 0.45 percent at 5,363.70. In the broader market, there were nearly two gainers for every loser on volume of 328 million shares.

Asian shares inched up on Friday after a flood of cheap European Central Bank funds this week eased fears of a meltdown in the euro zone financial sector, overriding some weak data and concerns about surging oil prices.

STOCKS ON THE MOVE

* Hero MotoCorp (HROM.NS) rose as much as 2 percent after the world's largest maker of motorcycles and scooters reported an 11 percent rise in February vehicle sales.

* Development Credit Bank Ltd (DCBA.NS) fell as much as 2.9 percent after it set late on Thursday a floor price of 47.65 rupees for selling shares to institutional investors, lower than the closing price of 49.25 rupees.

TOP THREE BY VOLUME

* Suzlon Energy (SUZL.NS) on 36.9 million shares

* Lanco Infratech (LAIN.NS) on 15.8 million shares

* GVK Power (GVKP.NS) on 12 million shares