BSE Sensex falls; state-run banks under pressure

Shares were also hit in the afternoon after Nifty futures dropped suddenly amid market speculation of a trading error. The National Stock Exchange later said it had not spotted any errors on its trading systems.

After the market close, Reliance Industries said net profit in the fiscal fourth quarter fell 21.2% to Rs 4236 crore, slightly below expectations. Shares had fallen 1.5% ahead of those results.

The country's main 30-share BSE index fell 0.74% to 17,373.84 points, while the 50-share NSE index lost 0.78% to 5,290.85. India's BSE index rose 1.6% this week, marked by a rally sparked by the Reserve Bank of India's aggressive 50 basis points cut in the repo rate on Tuesday.

Lenders had rallied on hopes easing move would bolster growth, but investors are now growing concerned that lenders are under pressure to lower lending and deposit rates sooner than they had hoped.

India's s state-run banks were among the day's big decliners. Bank of Baroda fell 2%, while Bank of India fell 2.2%. "There are expectations or fear in the market that government will force PSU banks to cut rates in a hurry, (which) will result in some contraction in margins in coming quarters," Manish Ostwal, a sector analyst at brokerage KR Choksey said, referring to public sector unit banks.

Among other decliners, shares in Indian cement manufactures fell for the second day, after posting a fall in quarterly profit on Thursday. Shares in ACC Ltd Ambuja Cements