BSE Sensex lower ahead of Bihar state election results

MUMBAI (Reuters) - The BSE Sensex and Nifty edged lower on Friday, heading for a second consecutive week of losses ahead of the results from elections in Bihar state, which Prime Minister Narendra Modi's party needs to win to improve the parliamentary strength it needs to push through reforms.

Modi's nationalists and opposition parties were running neck-and-neck in the elections, according to exit polls on Thursday. Official results will be announced on Sunday.

Disappointment over some results, including at Tata Steel Ltd , also weighed on sentiment, but state-run lenders rallied after State Bank of India recorded a better-than-expected 25 percent rise in quarterly profit.

 

"Markets think it will be hard for the Modi government to win Bihar elections. That, coupled with somewhat in-line results, are weighing," said Aneesh Srivastava, ?chief investment officer at IDBI Federal Life Insurance Co.

The Nifty was down 0.22 percent as of 2 p.m. It was down 1.6 percent for the week, marking a second consecutive weekly loss.

The Sensex was down 0.26 percent.

Among decliners, Tata Steel Ltd fell 3.2 percent after Europe's second largest steel producer posted lower-than-expected operating profit, even as net profit beat expectations.

Meanwhile, Dr Reddy's Laboratories Ltd slumped 13.8 percent after saying it received a "warning letter" from U.S. regulators over inadequate quality controls at three manufacturing plants producing drugs for cancer and other diseases.

But State Bank of India gained 2.3 percent after its results. Those earnings helped Bank of Baroda recover sharply from a fall of as much as 12.1 percent to gain 1.6 despite posting a slump in net profit itself.

(Reporting by Rafael Nam; Additional reporting by Abhishek Vishnoi; Editing by Sunil Nair)