Sensex inches lower; RBI policy meet eyed

MUMBAI (Reuters) - The BSE Sensex traded in a narrow range with a negative bias on Thursday as derivatives expiry, a long weekend and the central bank's credit policy meeting next week deterred investors from building large positions.

The Reserve Bank of India is likely to cut interest rates for the fourth time this year at a policy review on Sept. 29, as falling energy prices have cooled inflation and the economy has slowed, a Reuters poll showed.

Indian shares see-sawed between minor gains and losses with Thursday marking the expiry of September futures and options contracts, and traders churning positions.

"Because of the long weekend the market is not building any further volumes of the positions today," Deven Choksey, managing director at KR Choksey Securities, said.

Indian markets will be shut on Friday for a local holiday.

The Nifty was trading 0.02 percent lower while the Sensex slipped 0.14 percent at midday. Both indices are on track to end the week in the red after two straight weeks of gains.

Defensive stocks like IT, healthcare and consumer goods booked gains while financials and energy stocks lagged.

Among banking stocks, HDFC Bank fell 0.89 percent, Kotak Mahindra Bank fell 1.9 percent and ICICI Bank was down 0.7 percent.

Blue-chips stocks Larsen & Toubro slipped 1.7 percent while Reliance lost 1.2 percent, weighing on the NSE.

Infosys gained 1.3 percent, Lupin rose 3 percent and TCS was up 0.9 percent, offsetting some of the losses.

(Reporting by Karen Rebelo in Mumbai; Editing by Sunil Nair)