Sensex heads for worst week in 2 months; ITC, L&T fall

MUMBAI (Reuters) - India's stock markets fell on Friday, posting a fifth consecutive fall in their worst weekly performance in two months, as disappointing results from ITC and Larsen & Toubro raised concerns about the health of the corporate sector.

The falls on Friday marked the longest losing streak for indexes since early June, after the Reserve Bank of India (RBI) had kept interest rates on hold.

Sentiment this week has taken a hit due to caution about earnings and the U.S. Federal Reserve's statement putting into play a rate hike this year.

But indexes were still set to post gains of around 2 percent for October, snapping a two-month losing streak, largely on optimism sparked by the Reserve Bank of India's larger-than-expected 50 basis points rate cut on Sept. 29.

"Quarterly earnings have not been up to street's expectations, that has been discounted but minor impacts will be felt," Alex Mathews head of research at Geojit BNP Paribas said.

The broader Nifty dipped 0.42 percent after gaining as much as 0.42 percent earlier.

For the week, the index was set to fall 2.62 percent, its worst since the week ended on Sept. 4. But for the month, the NSE was set to rise 1.62 percent.

The benchmark BSE Sensex slipped 0.52 percent after rising as much as 0.39 percent earlier in the session.

Shares in ITC fell as much as 5.5 percent after the company's September quarter earnings missed analysts' estimates. The stock was the biggest drag on the Nifty.

Shares in industrial heavyweight Larsen & Toubro fell over 1 percent after its second-quarter net profit missed street estimates.

But not all companies fell after earnings. ICICI Bank was up 1.57 percent after it reported a 12 percent increase in quarterly profit due to faster retail loans growth.

Kotak Mahindra Bank , India's fourth-biggest private sector lender by assets, reported a better-than-expected 28 percent increase in quarterly profit and a stable bad loan ratio, sending its shares up more than 4 percent.

Jet Airways gained 2.14 percent while Spicejet was up 3.48 percent after India's civil aviation secretary announced a slew of proposed reforms that included raising foreign direct investments in airlines to 50 percent.

Dr Reddy's Laboratories gained 1.58 percent after the drugmaker posted record quarterly earnings on Thursday, outpacing analysts expectations as sales across North America, Europe and India rose.

(Reporting by Karen Rebelo in Mumbai; Editing by Anand Basu)