Sensex falls on growth worries

MUMBAI (Reuters) - Indian stock markets fell on Friday after the government cut its growth forecast, but indexes still headed for their biggest weekly gains in more than two months after the U.S. Federal Reserve raised interest rates without any disruptions to global markets.

The government said on Friday it now expected Asia's third largest economy to grow 7-7.5 percent in the fiscal year ending in March 2016, compared with an earlier estimate of 8.1-8.5 percent, in a report published on Friday.

Though the report pushed shares lower, analysts said its impact would likely not linger given the downgrade had been widely expected and that India is still posting better growth than many other emerging markets.

 

That could help India's prospects now that the Fed rate hike on Wednesday sparked little turmoil in emerging markets after the U.S. central bank announced a gradual approach to more tightening.

"Overall growth on the ground is improving," said Deven Choksey, managing director, K R Choksey Securities.

The broader Nifty was down 0.56 percent as of 0855 GMT, after rising for four consecutive sessions. For the week, it headed for a gain of 2.46 percent, its biggest since the week ended on Oct. 9.

The benchmark BSE Sensex was down 0.64 percent, but headed for a gain of 2.37 percent for the week.

Among other losers, IT stocks fell on reports that the U.S. Congress would pass a bill on Friday doubling H-1B visa fees.

Infosys fell 1.6 percent, while Tata Consultancy Services dropped 0.81 percent.

Oil stocks Reliance Industries , Cairn India , ONGC fell between 0.6 percent and 1 percent on weak crude prices.

However, Coffee Day Enterprises was an outlier, rising 1 percent after Citi began coverage of the stock with a "buy" rating, saying its profitability was likely to improve as the company took initiatives to raise sales throughput and completed a phase of store rationalization.

(Reporting by Karen Rebelo in Mumbai; Editing by Subhranshu Sahu)