Sensex falls to 10-week low on foreign outflow concerns

MUMBAI (Reuters) - The BSE Sensex and Nifty hit 10-week lows on Thursday, heading for their seventh straight session of falls as blue-chips such as Housing Development Finance slumped on concerns about foreign investors after Saudi Arabia launched air strikes in Yemen.

The tensions in the Middle East come at a time of rising concerns foreign investors will pare some of their positions in India. Overseas funds sold index futures worth 13.86 billion rupees ($221.2 million) on Wednesday ahead of monthly derivative expiry and end of the fiscal year.

Asian shares also fell after Saudi Arabia and Gulf region allies launched military operations including air strikes in Yemen on Thursday to counter Iran-allied forces besieging the southern city of Aden where the U.S.-backed Yemeni president had taken refuge.

"We think the market will drag for some time. There is a huge currency risk. And there are no near-term triggers," said Deven Choksey, managing director, KR Choksey Securities.

The benchmark BSE Sensex fell 1.2 percent to 27,789.70, while the broader Nifty is down 0.94 percent at 8,451.

Both the indexes are heading towards their lowest close since Jan. 14.

Companies with heavy foreign institutional holdings led the declines. Housing Development Finance Corp Ltd fell 5 percent.

ICICI Bank fell 1.4 percent, while HDFC Bank was down 2.1 percent.

However, telecommunications stocks rose, with Bharti Airtel gaining 1.2 percent and Idea Cellular adding 1.8 percent on hopes of winning key 900 Mhz spectrum.

India raised a record $17.6 billion from the sale of mobile phone airwaves in its latest telecom spectrum auction after 19 days of fierce bidding, the telecoms minister said on Wednesday. ($1 = 62.6700 rupees)

(Reporting by Indulal PM and Abhishek Vishnoi; Editing by Anand Basu)