Sensex extends losses to fourth day as Fed keeps rate hike in play

MUMBAI (Reuters) - India's stock markets fell for a fourth consecutive day on Thursday to two-week lows, tracking Asian markets after the U.S. Federal Reserve revived market expectations that it may yet raise interest rates by the end of the year.

The Fed kept rates unchanged as expected on Wednesday, but surprised investors with a direct reference putting in play a rate hike at its next policy meeting in December.

Sentiment was also subdued ahead of the expiry of October derivatives contracts at the end of the session, while caution ahead of earnings also weighed on the market.

"I think until the first week of November, we will play out the result seasons, and thereafter the market will find some stability," said Deven Choksey, managing director at KR Choksey Securities.

The benchmark BSE Sensex fell 0.56 percent to its lowest level since Oct. 15.

The NSE Nifty lost 0.54 percent. The index touched its lowest intraday level since Oct. 14.

Blue chips, which are more heavily owned by foreign investors, led decliners. Infosys Ltd fell 1.1 percent, while ITC Ltd lost 1.75 percent.

Search provider Just Dial slumped 10 percent after its quarterly earnings adjusted for other income missed analysts' estimates.

But among gainers, Yes Bank rose 2.4 percent, recovering from an earlier loss of as much as 2.73 percent after the bank posted a 26 percent rise in quarterly profit.

Dr.Reddy's Laboratories gained 2.37 percent ahead of its July-September earnings due later in the day.

(Reporting by Karen Rebelo in Mumbai; Editing by Anand Basu)