By Arnab Paul
(Reuters) - The Sensex and Nifty followed their Asian peers lower, dragged by drugmakers, as muted domestic earnings and weak U.S. retail sales hurt risk appetite.
Dr. Reddy's Laboratories Ltd was the top loser on the NSE index, falling nearly 30 percent after research firm Jefferies said 11 FDA observations under Form 483 on a unit of the drug firm included four repeat observations.
The generic drugmaker's Hyderabad-based plant was marked by the U.S. Food And Drug Administration last week. The FDA Form 483 notifies a company's management of objectionable conditions.
That had a knock-on effect on other pharma stocks, with the Nifty Pharma index falling 3.9 percent.
U.S. retail sales fell 1.2 percent in December, their biggest drop since September 2009, raising fresh doubts about the strength of the world's largest economy.
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MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent.
Investors were also cautious ahead of a meeting between the U.S. and China in Beijing, where the world's two largest economies attempt to resolve their trade dispute.
Investor sentiment also took a beating after a suicide bomber killed 44 Indian paramilitary police in Kashmir on Thursday, raising tensions with arch foe Pakistan.
The December-quarter results brought little cheer to investors. Keenly watched Jet Airways ltd reported its fourth straight quarterly loss while Ashok Leyland Ltd joined an extensive list of automakers to post a drop in quarterly profit.
Mahindra & Mahindra Ltd also posted a profit decline while Tata Motors Ltd reported a 269.93 billion rupees ($3.79 billion) loss earlier this month.
"In the near term, muted Dec18 quarter earnings growth and election uncertainty are likely to remain an overhang on the markets," said Vipin Khare, director of research at William O'Neil India.
"Even as the market is making a rally attempt, it continues to trade in a narrow band. On the downside, we would turn more cautious if the market closes below its recent lows of the last correction."
The broader NSE index fell 0.79 percent to 10,661 as of 0618 GMT, while the benchmark BSE index lost 0.65 percent at 35,642.9. Both the indexes were on track to lose over 2.5 percent over the week.
Ashok Leyland Ltd slid 4 percent after posting a 21.4 percent quarterly profit fall while Jet shrugged off early losses and was trading 4 percent higher.
Jet's board approved a rescue deal which would fix a near 85 billion rupees ($1.19 billion) funding gap and make its lenders its largest shareholders.
Nestle India Ltd fell 3 percent despite reporting a 10 percent growth in quarterly profit.
($1 = 71.2400 Indian rupees)
(Reporting By Arnab Paul in Bengaluru; Editing by Shreejay Sinha)
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