By Abhishek Vishnoi
MUMBAI (Reuters) - The BSE Sensex and Nifty snapped their three-day winning streak as blue-chips such as ICICI Bank fell on risk aversion after Chinese stocks posted their biggest daily drop in two weeks while caution prevailed a day ahead of the monthly derivatives expiry.
The Shanghai Composite Index <.SSEC>, the best performing equity index in Asia with a 39.6 percent return in dollar terms, lost 3 percent on profit-taking.
Back at home, shares gave up gains made earlier in the day after election results showed the Bharatiya Janata Party was leading in the vote count in Jharkhand and was neck-to-neck with rival People's Democratic Party in Jammu and Kashmir.
"BJP's performance in the two states is actually quite convincing. I think collateral sales due to global fears have somewhat weighed on the market today," said Deven Choksey, managing director, K R Choksey Securities.
Wins in either of the two states would give the BJP-led government a stronger presence in the upper house of parliament, smoothening the legislative fate of a slew of pending reforms including the rollout of a nationwide tax.
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The benchmark Sensex closed 0.71 percent lower and the broader Nifty lost 0.68 percent, marking their biggest daily fall in a week.
Blue-chips led losses. ICICI Bank fell 1.7 percent, while Larsen & Toubro ended 1.7 percent lower.
Software stocks also fell after HCL Technologies said its second-quarter dollar revenue would have adverse impact of about 210 basis points due to the strength of the greenback.
HCL Tech lost 3.2 percent, Infosys lost 1.4 percent and Wipro ended 0.5 percent lower.
(Editing by Subhranshu Sahu)