Sensex falls for fifth session as financials, autos drag

By Arnab Paul

(Reuters) - Indian shares extended losses to a fifth session on Monday, dragged by financials and automobiles, while investors took a cautious stance ahead of a U.S. Federal Reserve meet on Tuesday.

The benchmark indexes had plunged more than 3 percent on Friday as housing finance stocks witnessed heavy selling on worries over weak balance sheets.

The broader NSE Nifty was trading 0.75 percent lower at 11,059 as of 0552 GMT while the benchmark BSE Sensex was down 0.67 percent at 36,595.38 as risk appetite was muted ahead of a two-day Fed meet that ends on Wednesday.

"There are liquidity concerns ... financial stocks led the rally and now they are dragging the markets and it has a domino effect on sectors such as real estate and autos," said AK Prabhakar, head of research at IDBI Capital.

Indiabulls Housing Finance (INBF) fell 8.3 percent, while banking stocks such as ICICI Bank Ltd and State Bank of India Ltd lost between 1.7 and 1.9 percent.

The Nifty auto index was down 3.1 percent, with Mahindra and Mahindra Ltd falling 5.2 percent while Housing Development and Infrastructure Ltd, down 9 percent, led the Nifty Realty Index's 5 percent decline.

Shares of Dewan Housing Finance Corp Ltd (DHFL), which nearly halved in value on Friday after a credit rating agency downgraded IL&FS's non-convertible debentures, jumped 25 percent after the company clarified that it had no exposure to IL&FS Group.

"There is a lack of trust in the markets. Take the IL&FS case - when a AAA rated company is suddenly downgraded, how can people trust rating agencies," said Prabhakar.

Usha Martin Ltd surged as much as 15 percent after signing agreements with Tata Steel Ltd to sell its steel business.

On charts, shares of Oil and Natural Gas Corp broke above a resistance at 182.3 rupees, the 50 percent Fibonacci retracement level of the downtrend from Jan. 25 high to June 28 low.

IndusInd Bank Ltd hit over a six-month low breaking below a support at 1,746.3 rupees, the 23.6 percent Fibonacci retracement level of the uptrend from Feb. 29, 2016 low to Aug. 3, 2018 high.

(Reporting By Arnab Paul in Bengaluru; Editing by Vyas Mohan)