Indian shares were muted on Thursday, as the blue-chip stock indexes headed for their worst quarter since the early days of the pandemic, hit by fears that aggressive central bank policy aimed at curbing inflation could hurt the economy.

The NSE Nifty 50 index was up 0.13 percent at 15,819.45, as of 0513 GMT, and the S&P BSE Sensex advanced 0.22 percent to 53,141.76, on mild gains in bank and energy stocks. The rupee stepped back from record lows hit in the previous session and was trading at 78.93 per the dollar.

Still, the Nifty and the Sensex were set for their worst quarter since the March quarter of 2020, with losses of around 9 percent each.

The Nifty Smallcap 100 and the Nifty Midcap 100 have lost around 19 percent and 10 percent, respectively, in the quarter.

Foreign investors have sold Indian equities worth $13.81 billion in the April-June quarter, the biggest outflow since at least 2008.

The Reserve Bank of India has hiked interest rates twice in the quarter - once out of cycle. More hikes are expected with inflation above the central bank’s tolerance band for a fifth straight month in May, as crude oil and commodity prices surged following the Ukraine conflict.

“While the overheads of inflation and high interest rates are mostly priced in, any further rise in commodity and crude prices will remain a risk and a key monitorable for India,” said Samrat Dasgupta, chief executive officer at Esquire Capital Investment Advisors.

“It is difficult to predict at this point whether interest rates and inflation have peaked or whether stocks have found the bottom.”

The Nifty Metal subindex was the worst performer during the quarter, plunging around 26 percent, while the Nifty Auto index jumped nearly 12 percent.

Life Insurance Corp, which went public in India’s largest initial public offering, has crashed around 22 percent since its May debut.