Sensex, Nifty slip as financials, energy drag

(Reuters) - Indian shares fell on Monday in line with broader Asian markets after posting their best week since mid-2016, as investors were subdued ahead of a key U.S. Federal Reserve meeting.

Asian stocks sank as fears of faster rate hikes in the United States and uncertainty around the Sino-U.S. trade war deterred investment in riskier assets.

The broader NSE Nifty was down 0.64 percent at 10,486 as of 0558 GMT, while the benchmark BSE Sensex was 0.48 percent lower at 34,844.11.

"After strong gains last week, we may be seeing some consolidation this week," said Deepak Jasani, head of retail research at HDFC Securities.

"The Fed is also meeting later this week, which will be watched for its outlook on interest rates and impact on global interest rate trajectory. Ahead of that, markets will be a little cautious - they may not give up a large portion of last week's gains, but they aren't likely to build on previous gains either," Jasani added.

Markets are also watching the Iranian sanctions by United States, to see whether India will get an exemption, and in which form, he said.

Shares of heavyweight Housing Development Finance Corporation Ltd, down as much as 1.7 percent, were the biggest drag on the Nifty.

Indian Oil Corp Ltd's stock fell as much as 5.2 percent, and was among the top losers on the index.

The country's top refiner on Friday said second-quarter profit fell 12.2 percent, missing estimates by a wide margin, as forex expenses and raw material costs weighed.

Indiabulls Housing Finance Ltd's stock was the top loser, falling as much as 7.7 percent. Shares of Sun TV Network Ltd dropped 6.3 percent, after the company reported muted growth in quarterly advertising revenue.

However, Axis Bank bucked the weak financials trend, with shares rising as much as 3.7 percent to an over six-week high after India's third-biggest private sector lender by assets posted a better-than-expected 82.6 percent jump in second-quarter profit. The stock was the biggest boost to the index.

(Reporting by Chris Thomas in Bengaluru; Editing by Rashmi Aich)