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Indian shares struggled for direction on Thursday, as financials fell after a two-session rally, offsetting a rebound in information technology and a post-results jump in Mahindra & Mahindra.

The NSE Nifty 50 index was up 0.22% at 21,891.30, while the S&P BSE Sensex added 0.16% to 71,930.54, as of 10:25 a.m IST.

The benchmarks struggled for direction in the first hour of trading, swinging between gains of 0.3% and losses of 0.2%.

The broader, more domestically-focussed small- and mid-caps climbed about 1% each, outperforming the blue-chip indexes.

"It is important to keep in mind that domestic markets have been resilient despite weak global cues and have run up quite a lot, especially since November 2023," said Saurabh Jain, assistant vice president of research for retail equities at SMC Global Securities.

Jain anticipates high volatility and said the best way to navigate market fluctuations is to increase the exposure to large-cap stocks while trimming investments in some of the small- and mid-caps.

India's volatility index has hovered around 10-month highs since Jan. 30, ahead of the interim budget.

Ten of the 13 major sectors logged gains.

The highest weighted sector - financial services - fell 0.3%. The index had jumped about 2.04% in the previous two sessions.

IT added 1% on Thursday, recouping losses from the previous session amid concerns over potential delays in the easing of interest rates in the U.S., a key market for the sector.

Auto stocks advanced 1%. Mahindra & Mahindra jumped about 5% and was the top Nifty 50 gainer.

While weak demand for tractors weighed on the results, analysts expected profitability to remain steady for the company.

Energy stocks climbed 1.5%, supported by a sustained post-results rally in Coal India and oil marketing companies such as Bharat Petroleum Corporation and Indian Oil Corporation.