Nifty heads for first fall in three sessions; banks lead losses

(Reuters) - The NSE Nifty came off an 11-month high on Wednesday and was headed for its first fall in three sessions as investors booked profits ahead of quarterly results.

Uncertainty also prevailed in the market as investors await the government's announcement on the next central bank governor after local media reported it could come this week.

Meanwhile, soaring food prices drove headline inflation to its highest level in nearly two years in June, data released late on Tuesday showed, increasing the odds of the central bank keeping interest rates on hold next month.

"Traders are booking profits as we move into the earnings season, where broad-based moves are expected to be replaced by sector-specific moves," said Anand James, chief market analyst at Geojit BNP Paribas Financial Services.

The broader Nifty fell as much as 0.32 percent, after rising to its highest level since Aug. 11, 2015 earlier in the session.

The benchmark BSE Sensex dropped as much as 0.20 percent, after hitting its highest mark since Aug. 20, 2015 earlier in the day.

Banks were among the biggest losers, with major public sector banks dragging the Nifty Bank Index down 0.55 percent after rallying 3.6 percent in the previous two sessions.

Yes Bank Ltd fell as much as 1.4 percent, Axis Bank Ltd declined up to 1.76 percent, and IndusInd Bank Ltd lost as much as 1.98 percent.

Meanwhile, oil stocks rallied on reports the government had approved a 25 paise hike in kerosene prices per month until April 2017. The S&P BSE Oil and Gas Index was up 1.04 percent, with Oil and Natural Gas Corp Ltd gaining 4.85 percent and Oil India Ltd rising 3.38 percent.

Dairy food processor Kwality Ltd gained 6.1 percent on a $77.43 million capital commitment from KKR, while

Bharat Heavy Electricals hit a near six-month high on report of a new power plant deal.

(Reporting by Samantha Kareen Nair in Bengaluru; Editing by Subhranshu Sahu)