Sensex heads for second straight fall as state-run banks decline

(Reuters) - Indian shares edged down on Monday, heading for their second session of declines, as state-run lenders such as Bank of Baroda slumped after a surge in provisions led to quarterly losses.

Global market sentiment was subdued in the wake of soft Chinese indicators, which have added to doubts about whether the world's second-largest economy is stabilising.

Investors were also spooked after data showed India's wholesale prices unexpectedly rose for the first time in 18 months in April, ending a period of deflation.

The report comes after data last week showed stronger-than-expected consumer inflation for April, cementing expectations the central bank would not cut interest rates at its policy review on June 7.

"The underperformance is mainly coming from the PSU bank space after quarterly reports and other banks are also joining the cue," said AK Prabhakar, head of research at IDBI Capital.

The broader NSE Nifty was down 0.53 percent at 7,774.21 as of 0724 GMT, while the benchmark BSE Sensex was 0.42 percent lower at 25,383.78.

Banking stocks were the biggest losers, with the S&P BSE Bankex index shedding 1.5 percent.

Bank of Baroda slumped 9 percent after the country's second-biggest bank by assets posted its second straight quarterly loss on Friday.

Other lenders such as Central Bank of India, UCO Bank, Allahabad Bank were down 3-4 percent after reporting net losses for the March quarter.

Among the gainers, Raymond rose 2 percent after the Economic Times reported the clothing retailer is in talks with KKR & Co and Blackstone to sell a 20 percent stake in its branded apparel business to fund expansion.

Akzo Nobel India gained 4 percent after the chemicals company posted an 18 percent jump in March-quarter profit and declared a special dividend.

(Reporting by Aastha Agnihotri in Bengaluru; Editing by Subhranshu Sahu)