Sensex falls; banks hit on concerns about SBI results

MUMBAI (Reuters) - The BSE Sensex fell on Thursday, led by declines in banks on worries that the country's largest lender, State Bank of India, may post lower-than-expected December-quarter earnings on Friday.

Traders speculate that SBI's bad loans and slippage would be higher than the September-quarter thereby weakening outlook for credit growth and in turn other stock in the sector.

The Bank Nifty fell 0.94 percent compared with a 0.23 percent decline in the Nifty.

"SBI's earnings would disappoint, in-line with other state-run banks, but lower provisions ahead of equity issue might mask the actual profitability," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm based in Mumbai.

Also, falls overpower the positive impact of incremental flows to Indian shares after its weighting increased in MSCI Emerging Market index post review, analysts said.

The BSE Sensex fell 0.35 percent on Thursday.

Banks led the declines. State bank of India fell 2 percent while ICICI Bank lost 1.3 percent.

Bank of Baroda fell 1.4 percent while Axis Bank lost 0.5 percent.

(Reporting by Abhishek Vishnoi; Editing by Anand Basu)