MUMBAI (Reuters) - The Nifty cut losses of as much as 1.3 percent earlier in the day after state-run Life Insurance Corporation of India started buying shares, said three dealers handling trades for institutional clients.
Buying by the insurer was mainly in banks, software services and defensive sectors, two of the dealers added.
LIC is a powerful market player in India that has been known to support markets at times of vulnerability, and whose moves can shift sentiment.
"Market is seeing aggressive support (for NSE) at 8,000 levels from LIC. Hopefully, downside looks minimum from today's low," a dealer with a domestic broker told Reuters.
An LIC spokesman said the insurer does not comment on market speculation.
The Nifty was down 0.5 percent after earlier falling as much as 1.3 percent to its lowest intraday level since Oct. 21.
Support from LIC comes as the Nifty appears headed for its fifth consecutive fall, matching a five-day losing streak in July.
Overseas investors sold shares worth 12.47 billion rupees ($196.6 mln) on Tuesday, their biggest daily net sales since Oct. 17, and have been net sellers for six consecutive sessions, according to regulatory data.
Meanwhile, the Sensex was down 0.2 pct after earlier falling as much as 1.1 percent.
(Reporting by Abhishek Vishnoi; Editing by Rafael Nam and Gopakumar Warrier)