Indian shares closed 0.4 percent lower on Friday in choppy trade as data showing inflation hit its highest level in more than seven years undermined sentiment, dealers said. The benchmark Mumbai 30-share Sensex index fell 60.58 points to 15,189.62. "Aggressive measures to control inflation cannot be ruled out even as oil prices impact fundamentals," said a dealer at brokerage Jamnadas Morarjee.
Annual inflation in Asia's third-largest economy rose to 8.75 percent for the week ended May 31, the highest since February 2001, from 8.24 percent a week earlier. Dealers said fears of further monetary tightening weighed down the market. The Reserve Bank of India is set to hold its next monetary policy meeting later next month.
On Wednesday, the central bank raised a key short-term borrowing rate by a quarter percentage point to 8.0 percent to battle inflation that analysts say appears headed to double-digit levels.