NEW DELHI: Indian shares pared all their early gains on Thursday in choppy trade, as concerns over the health of the global economy dampened investors' appetite for bargain buys in one of the worst performing stock markets in the world this year.
Weariness ahead of the monthly derivative contracts expiry also weighed on Indian shares, which have lost almost 21 percent of their value so far this year.
By 11:09 a.m. (0539 GMT), the main 30-share BSE index was down 0.36 percent at 16,227.6 points, with 21 of its components in the red. It had opened up 0.41 percent.
The broader 50-share NSE index was trading down 0.43 percent at 4,867.7 points.
Analysts said volatile trade was typical ahead of the expiry of the August derivative contracts on the National Stock Exchange on Thursday.
"There is no positive trigger for the market besides the fact that we are oversold. The only positive trigger could be tomorrow evening, when global markets are expecting something from Ben Bernanke," said Neeraj Dewan, director at Quantum Securities.
The market focus is firmly on a speech by the US central bank chief scheduled for Friday at the Federal Reserve's annual conference in Jackson Hole, Wyoming, which some investors hope will contain fresh steps to bolster the economy.
Technology shares fell 1 percent, as positive comments from the top firms failed to negate concerns of a slowdown in corporate IT spending, if economic uncertainties persist in the United States and Europe, which account for more than 70 percent of the industry's revenue.
Tata Consultancy Services (TCS), India's top software firm, fell 0.62 percent, while No. 2 player Infosys Ltd shed 0.93 percent.
Banking stocks were also down more than 1 percent on fears that high interest rates would hurt borrowers' ability to repay loans and increase delinquencies.
Automakers led the gains, rising 0.33 percent, as prospects of a holiday season boosting sales somewhat renewed investor confidence in a lagging industry this year.
Maruti Suzuki, India's top carmaker, rose 0.56 percent, while Mahindra & Mahindra , India's largest utility vehicles maker, was mostly flat.
However, Reliance Industries, which has the biggest weightage on the index, fell 0.32 percent, dragging down the broader market.
Last week, the index logged its fourth straight weekly loss, its longest such streak since Lehman Brothers' collapse in September 2008.
Earlier in the day, Asian shares rose, mirroring overnight gains on Wall Street, but worries over the world economy and the Western financial system continued to damp investor confidence.
"The impact of global factors is high right now...If Europe opens higher, there could be some recovery," Dewan said.
He said news of recent rating and price target cuts have also dented investor sentiment in Asia's third largest economy.
In the broader market, there were more than two losers for every gainer, with about 200 million shares changing hands.
At 0552 GMT, the MSCI's measure of Asian markets other than Japan was up 0.36 percent, Japan's Nikkei was up 1.71 percent while South Korea's KOSPI was trading higher by 0.88 percent.
STOCKS ON THE MOVE
Tata Motors Ltd rose 1.9 pct after a newspaper reported the vehicle maker's partnership with Fiat Motors would continue.
Tata Power gained 1.31 percent after its chairman Ratan Tata said the firm was looking for power projects outside the country to sustain its growth.
Compuage Infocom Ltd rose 3.65 percent, after the company said its board would consider allotment of shares on a preferential basis to a non-promoter group.
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