BSE Sensex likely to drop; Tata Steel watched

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MUMBAI (Reuters) - The BSE Sensex is expected to open lower on Thursday as investors take profits after a recent rally and await Greece's debt talks to reach a deal and avoid a messy default.

The BSE index has climbed 15 percent in just over five weeks and the 14-day Relative Strength Index at Wednesday's close was at 71.9, indicating the market was overbought.

Neeraj Deewan, director of Quantum Securities, said the market was headed for a correction, but strong demand from foreign institutional investors would help stocks to rebound later.

"There is scope for the market to go up further after some profit booking of around 4-5 percent in the coming sessions," he said.

Tech Mahindra , India's fifth-largest software services company, may climb after it posted a better-than-expected 7.4 percent rise in quarterly net profit late on Wednesday.

Tata Steel Ltd , the world's No.7 steelmaker, will be watched ahead of its December quarter results, expected after market hours. Analysts on average estimate a 41 percent fall in net profit to 5.6 billion rupees, according to Thomson Reuters

I/B/E/S.

Global markets were down as sentiment grew cautious after Greek political leaders said talks would continue to resolve a issue in the way of a deal on a bailout package, which is crucial to avoiding a debt default.

The MSCI's measure of Asian markets other than Japan <.MIAPJ0000PUS> was down 0.6 percent by 0224 GMT, while Japan's Nikkei fell 0.56 percent.

The Nifty India stock futures in Singapore were down 0.5 percent.

On Wednesday, the BSE index rose 0.5 percent to 17,707.32 points.

STOCKS TO WATCH

Thomas Cook India will be watched after its parent Thomas Cook confirmed it planned to sell its 77 percent stake in the Indian arm as it looks to bring down its debt of 890 million pounds.

Kalpataru Power may open down after it reported a 21 percent fall in its December quarter net profit.

(Reporting by Nandita Bose and Sanjeev Choudhary; Editing by Ranjit Gangadharan)