Nifty at lowest close since pre-'Big Bang' reform levels

By Manoj Dharra

MUMBAI (Reuters) - The Nifty fell on Friday to its lowest close since the government's 'Big Bang' reforms in September had sparked a powerful rally, as concerns that foreign investors would exit some of their holdings continued to hit blue-chips.

Indexes have fallen for three consecutive sessions, with the NSE ending the week down 2.3 percent to post its biggest weekly loss in two weeks.

Fears of foreign selling come amid worries about the domestic economy, with data last week showing the October-December current account deficit rose to a record a high, and on lingering concerns about political stability.

Global risk aversion is also increasing, even after Japan's massive monetary stimulus announced on Thursday was seen unleashing a potential flood of money flows worldwide. Asian shares were hit on Friday by fears of a weaker-than-expected U.S. jobs monthly data due later in the day,

Foreign institutional investors (FIIs) sold shares worth a net 6.9 billion rupees over Wednesday and Thursday, a departure from heavy buying that has propped up domestic shares. Overseas investors had bought over $10 billion so far this year and about $25 billion last year.

"In the short term, India may remain under pressure on fears of outflows sparked by FII selling in last few sessions. Even earning season is expected to remain muted with consumption affected due to cut in government expenditure," said Vivek Mahajan, Head of Research, Aditya Birla Money.

The broader Nifty ended down 0.39 percent, or 21.50 points, to 5,553.25, its lowest close since September 13, 2012, the day the government raised diesel prices, which was followed the next day by a slew of reforms including opening up the retail and aviation sectors for foreign investments.

Those actions became widely known as "big bang" reforms, ushering a rally in domestic shares, but one that started petering out in February.

The BSE Sensex fell 0.32 percent, or 59.47 points, to 18,450.23, marking its lowest close since November 20, 2012, falling

2.05 percent for the week.

Shares with sizeable foreign investor holdings were among the leading decliners on Friday.

ICICI Bank Ltd fell 1.1 percent as foreign investors hold 37 percent in India's biggest private sector lender. Mortgage lender Housing Development Finance Corp Ltd , which has foreign holdings of 22.8 percent, lost 2.7 percent.

Among other decliners, United Spirits Ltd fell 3.9 percent after U.K. drinks group Diageo Plc opted not to lift its offer price of 1,440 rupees for a proposed stake purchase in the company.

Bharti Airtel Ltd ended 1.22 percent lower after a panel of judges at Delhi High Court set aside on Thursday the court's earlier order that had halted the execution of a government ban on the company's 3G service pacts with rival carriers.

However, Maruti Suzuki India shares rose 7.3 percent, posting its biggest gain since January 17, 2012, as Japan's massive stimulus is expected to hit the yen, which could boost the auto maker's earnings by reducing the costs of imports from Japan.

Reliance Industries gained 1.6 percent, recovering from recent falls on attractive valuations and hopes that January-March earnings would improve led by better margins in refining and petrochemical sectors.

(Additional reporting by Abhishek Vishnoi; Editing by Sunil Nair)