Indian shares may open lower on Monday, unsettled by the rapid rise in inflation to 14-month highs, worries about the deteriorating outlook of the US economy and losses in Asian share markets.

Asian shares were headed towards their worst quarterly performance in over five years on persistent concerns about the global credit crunch. By 0333 GMT Tokyo was down 1.5 per cent, Seoul had slipped 0.2 per cent and Hong Kong had lost 1.6 per cent.

"The global cues are negative and plus there is inflation, because of which we may see a rise in the cash reserve ratio," said Ambareesh Baliga, vice-president at Karvy Stock Broking.

Indian inflation rose to its highest in nearly 14 months at 6.68 per cent in mid-March, data showed on Friday, prompting markets to expect a policy response form the central bank, such as higher interest rates or increased reserve requirements for banks.

The benchmark 30-share BSE index rose 2.2 per cent on Friday to 16,371.29 points. It gained 9.2 per cent on the week, its first rise in four weeks and biggest in five months.

The index is now 19 per cent down this year, and nearly 23 per cent below a record high of 21,206.77 hit on Jan 21.

The broader 50-share NSE index rose 2.31 per cent to 4,942.00 on Friday. The Nifty April futures ended at 4,970.65, widening the premium to the spot to 28.65 points.

Foreign funds bought Indian shares worth $106.8 million on Thursday. They have sold a net $3 billion so far this year after buying more than $17 billion in 2007.

Stocks To Watch
* Indian Overseas Bank after the state-run bank said its board has approved taking over Pune-based Shree Suvarna Sahakari Bank.

* Steel firm Ispat Industries after a top official said the company plans to raise 10 billion rupees through a mix of rights issue and overseas bonds to part finance new projects.

* JM Financial Ltd after it said a unit will buy out joint-venture partner in JM Financial ASK Securities Pvt Ltd, raising its stake to 100 per cent from 60 per cent.

* ICI India after the paints and chemicals maker said it will sell its adhesives business for 2.6 billion rupees to Germany's Henkel Group, in line with the global sale of the business.

* Software services firms Four Soft and Take Solutions after the two firms decided to merge.
(Reuters)