Nifty marks two-month closing low; Fed key

By Abhishek Vishnoi

MUMBAI (Reuters) - Nifty fell for a fourth consecutive session on Wednesday to its lowest close in two months as banks were hit after biggest Indian private lender ICICI Bank said bad loans had risen and it would set aside more funds.

Banks had already fallen 0.3 percent on Tuesday after the Reserve Bank of India surprised investors by raising interest rates for the third time in five months to contain inflation.

The hike in rates did help boost the rupee at a time when emerging markets were under pressure, but stock investors are concerned about its potential impact on economic growth.

Overseas investors have sold shares worth $452 million since Thursday's close amid turmoil in emerging markets.

Volumes on the BSE Sensex sank to the lowest in four days, with caution also prevailing ahead of the conclusion of the United States Federal Reserve's policy meeting later in the day.

The Fed is widely expected to continue reducing its monthly bond purchases by $10 billion a month.

"I think the decision on tapering is crucial for global markets including India. $5-10 billion is okay but anything beyond that would be a shock for us," said Sudip Bandyopadhyay, managing director at Destimoney Securities Pvt Ltd.

The Nifty lost 0.1 percent, or 6 points, to end at 6,120.25, its lowest close since November 28.

The BSE index fell 0.18 percent, or 36.21 points, to end at 20,647.30, extending its losing streak for a fourth consecutive session.

ICICI Bank Ltd fell 1.7 percent after its chief executive officer said she expects addition in bad loans and restructured debt to continue in the coming quarters.

The bank's December-quarter net non-performing loans rose to 0.94 percent versus 0.76 percent a year ago.

Among other financial stocks, Housing Development Finance Corporation Ltd fell 0.7 percent while State Bank of India Ltd ended 1.4 percent lower.

Bharti Airtel Ltd lost 1.3 percent, having earlier risen as much as 2.86 percent, after October-December voice minutes on its India mobile network grew 1.47 percent quarter-on-quarter, lagging some analysts' expectations.

Sesa Sterlite fell 3.2 percent after the company reported December-quarter net profit of 18.68 billion rupees, which lagged some analysts expectations.

Among stocks that gained, Maruti Suzuki India Ltd rose 6.9 percent, recovering from an 8.2 percent drop on Tuesday due to concerns about Suzuki Motor's plans to invest $488 million to build a car plant in India's Gujarat state.

Havells India Ltd rose 3.3 percent after the company said its December-quarter net profit rose 28.3 percent to 1.21 billion rupees.

(Editing by Anupama Dwivedi)