Sensex falls; investors cautious ahead of global events

REUTERS - Indian shares edged down on Friday and were headed for their first weekly loss in three, as caution prevailed ahead of the U.S. Federal Reserve meeting next week and Britain's referendum on European Union membership on June 23.

Global factors are likely to be the main drivers of Indian stock markets for the rest of the month, after they hit their highest levels since late October this week on hopes of an improving economy.

Fed officials meet next Tuesday and Wednesday, and the U.S. central bank is expected to leave rates unchanged.

"There are a lot of short positions in the market, people have gone short anticipating market volatility in the context of 'Brexit'," said V K Vijayakumar, chief market strategist, Geojit BNP Paribas Financial Services Ltd.

The broader Nifty was down 0.16 percent at 8,190.7 as of 0825 GMT, heading for a 0.4 percent weekly loss.

The Sensex was 0.4 percent lower at 26,653.05, on track for a 0.7 percent weekly loss.

Among losers, Tata Motors Ltd dropped as much as 2.1 percent, after rising 4 percent over the previous six sessions on robust May sales.

State Bank of India fell as much as 2.2 percent. Moody's Investors Service said on Friday India's top state-run banks would need more than double the capital the government planned to inject into them due to their weak asset quality and levels of profitability.

But private sector lenders rose, with Yes Bank Ltd gaining as much as 2.7 percent.

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