BENGALURU, Feb 9 (Reuters) - Indian shares struggled for direction on Friday as investors digested the fading likelihood of early rate cuts in India and the United States, and as oil and gas stocks pulled back after a recent rally.
After swinging between gains of 0.3% in the first hour of trading, the NSE Nifty 50 index was up 0.06% at 21,729.75 as of 10:20 a.m. IST, while the S&P BSE Sensex added 0.16% to 71,543.63.
India's central bank kept interest rates unchanged on Thursday, as expected, and signalled rate cuts may not be imminent.
Meanwhile, a resilient U.S. labour market report fuelled worries the U.S. rate-easing cycle would be further delayed.
The broader, more-domestically focussed small- and mid-caps dropped about 1.25% each, snapping their recent outperformance over the benchmark indexes.
"Volatility is the new norm in Indian equities," said Aishvarya Dadheech, founder and chief investment officer at Fident Asset Management.
"When valuations are so stretched, like now, in small- and mid-caps, there will always be elevated volatility and occasional profit booking, like we saw over the last two weeks," added Dadheech.
The Nifty volatility index has remained near the 10-month highs it hit two weeks back ahead of India's budget.
Oil and gas shares shed 1.7% and were the top sectoral loser after they jumped about 9% in the past five sessions on strong quarterly results from index constituents.
Metal stocks dropped 1.6%, dragged by demand concerns for top consumer China and a firm U.S. dollar.
On the flip side, the top Nifty gainers included Tata Consultancy Services, ICICI Bank and Reliance Industries which gained about 1% each.
Apollo Hospitals gained 2% after its quarterly profit beat market estimates. (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Savio D'Souza)
