MUMBAI: Indian shares were up 0.2 percent on Wednesday after an early slide to their lowest in seven months triggered bargain hunting, but the market undertone remained shaky due to stubbornly high inflation and rising interest rates.
Top utility vehicle maker Mahindra & Mahindra rallied 3.1 percent ahead of its quarterly earnings, and industry data that showed strong consumer demand.
Car sales in India rose 26 percent in January, defying an expected slowdown as a growing middle class, easier access to loans and a wider choice of models kept up the pace of growth in Asia's third largest economy.
DB Realty tumbled 20 percent after authorities arrested Managing Director Shahid Balwa in connection to a massive telecoms scandal that has crippled the government.
Balwa is also vice chairman of Etisalat DB, the Indian telecoms joint venture between Abu Dhabi's Etisalat and DB Group.
Shares in Unitech , India's second-largest listed realty company, fell more than 8 percent in early trade to 37.80 rupees, its lowest level since April 2009.
Last week, Unitech was among two companies accused by police of buying mobile licences at unfairly cheap prices.
Its Unitech Wireless joint venture is majority held by Norway's Telenor .
Unitech last week denied that it had received any favours and said it had complied with rules, while Telenor said it had no reason to believe the licenses were issued improperly.
By 11 a.m. (0530 GMT), the 30-share BSE index was trading up 0.18 percent at 17,807.88, with 14 of its components advancing. It fell as much as 1 percent in early trade to 17,593.79, its lowest level since early July.
The benchmark is down more than 13 percent in 2011, as foreign funds pulled out $1.3 billion.
"Though valuations broadly may be close to reasonable, more downside is likely in a market like this. One should buy selectively and in small quantities," said Ambareesh Baliga, vice president at Karvy Stock Broking.
Energy major Reliance Industries, which has the highest weight on the main index, was up 2.1 percent after falling almost 14 percent this year.
Lenders pulled back after a recent slide. The banking sector index was up 0.8 percent, but is down 13.2 percent in year-to-date. ICICI Bank and HDFC Bank gained nearly 2 percent and 1.1 percent respectively.
Metal producers fell as base metal prices came off after China raised interest rates on Tuesday for the second time in just over six weeks, intensifying a battle in the fast-expanding economy against stubbornly high inflation.
The BSE metals index was down 1.7 percent.
Non-ferrous metal producer Sterlite Industries and aluminium producer Hindalco were down 2 percent and 2.3 percent respectively.
Tata Steel, the world's seventh-largest maker of the alloy, dropped 1.2 percent.
In the broader market, losers were 2.7 times the number of gainers on volume of 99 million shares.
The 50-share NSE index was up 0.3 percent at 5,325.60.
The MSCI's measure of Asian markets other than Japan was down 0.7 percent, while Japan's Nikkei was trading 0.1 percent lower.
STOCKS ON THE MOVE
State-run oil marketing companies Hindustan Petroleum and Bharat Petroleum were down 1.1 percent each as world crude oil prices firmed.
United Spirits, the world's third largest spirits maker by volume, was down 5.4 percent at 1,031.50 rupees ahead of its quarterly earnings announcement.
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