BENGALURU, March 11 (Reuters) - Indian shares fell on Monday, weighed down by a decline in banking and Tata Group stocks, while investors booked profits ahead of key domestic and U.S. inflation data.
The blue-chip NSE Nifty 50 (.NSEI), opens new tab shed 0.72% to 22,332.65, while the BSE Sensex (.BSESN), opens new tab settled 0.83% lower at 73,502.64.
"A lot of investors will close their books in March and take some profit. This will likely lead to selling at record high levels in the next three weeks," said Aishvarya Dadheech, founder and chief investment officer at Fident Asset Management.
Adding to that, regulatory instructions on small- and mid-cap funds and underperformance in the broader small- and mid-caps could continue, Dadheech added.
The broader, more domestically-focussed small-caps (.NIFSMCP100), opens new tab lost 2%, underperforming the benchmarks, while mid-caps (.NIFMDCP100), opens new tab dropped 0.4%.
There may be pockets of irrational exuberance in Indian equity markets, the Securities and Exchange Board of India (SEBI) said on Monday, referring to concerns over stretched valuations and elevated fund inflows into small- and mid-caps.
The segments have underperformed the Nifty 50 since the markets regulator on Feb. 27 asked mutual funds to disclose more about risks.
On the day, financials (.NIFTYFIN), opens new tab, banks (.NSEBANK), opens new tab, private banks (.NIFPVTBNK), opens new tab and state-owned banks (.NIFTYPSU), opens new tab lost between 0.65% and 2%.
HDFC Bank (HDBK.NS), opens new tab fell 1.27% after CLSA flagged challenges for deposit growth and net interest margin recovery for the private lender.
State Bank of India (SBI.NS), opens new tab dropped 1.82% after India's top court rejected a plea by the state-owned lender, seeking more time to share political donors' names.
Tata Group stocks Tata Consumer (TACN.NS), opens new tab, Tata Steel (TISC.NS), opens new tab and Tata Motors (TAMO.NS), opens new tab shed between 1% and 3.1%, on reports, opens new tab that Tata Sons' listing appeared improbable in the near term.
Meanwhile, India's consumer price inflation is forecast to have edged down to a four-month low in February, according to a Reuters poll of economists. The data is due after market hours on Tuesday.
Asian markets were muted ahead of U.S. inflation data, also due on Tuesday.
Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sherry Jacob-Phillips, Dhanya Ann Thoppil, Varun H K and Sonia Cheema
