Sensex, Nifty post biggest weekly fall since mid-March

By Himank Sharma

MUMBAI (Reuters) - The BSE Sensex fell nearly 1 percent on Friday, marking its eighth consecutive session of falls as Power Grid Corp fell after saying it would sell new shares to raise funds, while banks and consumer good companies extended recent falls.

The benchmark BSE index lost 2.96 percent and the Nifty lost 3.54 percent this week, marking their worst performance since the week ended on March 22, on uncertainty about how long the Reserve Bank of India would continue its measures to defend the rupee.

At the same time, the rupee flirted with record lows, with investors bracing for potential volatility after the U.S. employment data is released later in the day.

"Everything now rests upon how the currency moves in the near term. As the global economic scenario turns somewhat stable, domestic vulnerabilities get exemplified in the markets," said Kuashik Dani, head of equities at Peerless Mutual Fund.

The BSE Sensex ended down 0.79 percent at 19,164.02, while the Nifty lost 0.87 percent to close at 5,677.90.

Both indexes have lost about 6 percent each in the last eight trading sessions.

Power Grid Corp of India slumped 11.18 percent after saying it would issue 694.5 million new shares in a secondary share offering, worth 71.43 billion rupees as of Thursday's close.

State-run banks continued recent falls on asset quality concerns, while Bank of America-Merrill Lynch downgraded public sector lenders Bank of Baroda and Union Bank of India on worries about market-to-market losses on their bond portfolios on the back of the central bank's rupee measures.

Private banks reliant on short-term funds have also been pummelled following the RBI's actions last month. Yes Bank slumped 5.78 percent on Friday, bringing its loss for the week to 15.91 percent, its worst performance since March 2009.

Yes Bank has fallen 38.3 percent since the RBI first unveiled its cash draining measures on July 15.

Financial Technologies slumped 23.04 percent, dropping for a second consecutive session, while its unit Multi Commodity Exchange of India dropped 20 percent.

Financial Technologies shares have now lost 72.6 percent in value in the last two trading sessions after commodity bourse unit National Spot Exchange Ltd suspended trade in most of its forward contracts and deferred payments on client trades.

Meanwhile, consumer goods shares retreated further from record highs hit last month, Hindustan Unilever falling 3.03 percent and ITC down 1.9 percent.

Shares in retailers, however, gained after the government relaxed foreign investment rules in the sector, raising hopes it would spur overseas interest in domestic chains.

Future Retail closed 6.17 percent higher, while Trent ended up 0.56 percent.

Jewellery maker Titan Industries rose 8.91 percent after Deutsche Bank upgraded the stock to "buy", saying RBI's recent clamp-down on gold imports will have little negative impact on organised retailers such as Titan.

(Reporting by Himank Sharma; Editing by Rafael Nam and Jijo Jacob)