Sensex snaps six-day rally; blue chips drag

MUMBAI (Reuters) - The BSE Sensex fell nearly 1 percent on Thursday, snapping a six-day rally as investors booked profits, especially in blue chips such as Reliance Industries .

The drop, in contrast with Asian peers, came after indices posted their best weekly gain since 2011 in the week ended March 4, boosted by a fiscally prudent budget announcement.

"In India, there is a positive feeling after the Budget, but there will always be an overhang of global volatility, which could be coming from Europe, the U.S. or China," said Sadanand Shetty, senior fund manager at Taurus Mutual Fund, which has about 50 billion rupees (around $746 million) in assets under management.

The broader NSE Nifty fell 0.45 percent to 7,499.33 at 0835 GMT, while the benchmark BSE index dropped 0.77 percent to 24,602.10.

Investor sentiment has improved after the government stuck to its fiscal deficit target for the next financial year, raising hopes the central bank would soon cut key policy rates.

Mirroring the optimism, foreign investors net bought $1.11 billion worth of shares this month, but have been net sellers worth $1.77 billion for the year.

Among the losers, power equipment maker Bharat Heavy Electricals fell 3 percent on media reports rating agency CRISIL has lowered the rating of the company's long-term bank facilities citing a constrained business risk profile. (http://bit.ly/221FnWB)

Reliance Industries fell 2.9 percent after gaining 3.5 percent over the past two sessions, amid expectations it would declare a dividend at a board meeting on Thursday.

Software maker Infosys fell 3 percent on reports four shareholders have put up for sale a block of shares to raise up to 8.8 billion rupees (around $131 million).

Miners such as Vedanta Ltd and Hindalco Industries jumped 1 percent and 3 percent, respectively, on reports the government has cleared an amendment to the mining Act.

(Reporting by Aastha Agnihotri; Editing by Biju Dwarakanath)