Sensex little changed in choppy trade; financials drag

MUMBAI (Reuters) - Indian shares were little changed in choppy trade on Friday, with investors paring exposure to financial stocks as they seek more clarity on the government's decision to make foreign portfolio and direct holdings fungible.

India said it would club together different categories of foreign investment by creating a composite foreign holding cap, a move that boosted banking stocks on Thursday on hopes of higher foreign capital inflows.

However, financial and banking shares turned negative on Friday as market watchers said more clarity was needed on the composite caps, especially in the context of sector limits.

"People were thinking FDI caps and all these caps and sub-limits are being removed in one go," said Daljeet Kohli, head of research at IndiaNivesh Securities.

 

"Then the fine print says that actually for the sectors there will be sub-limits which means that banks, insurance etc. will still not be beneficiary as many people were believing."

The BSE Sensex was up 0.06 percent, while the Nifty index was higher 0.04 percent.

The Bank Nifty was flat at 19,167.20.

Housing Development Finance Corp fell 1.9 percent, HDFC Bank lost 0.48 percent and Kotak Mahindra Bank declined 0.96 percent.

Meanwhile, some support came in from large caps. Larsen & Toubro rose 0.63 percent, ICICI Bank gained 0.91 percent and Infosys was up 0.35 percent.

Bharti Infratel Ltd's shares rose 3.6 percent on a media report that the company is looking to acquire towers of Idea Cellular Ltd and Vodafone .

Sun Pharmaceutical Industries gained 0.81 percent as CLSA raised its target price to 1,160 rupees from 1,130 rupees and kept its "high conviction buy".

(Reporting by Karen Rebelo; Editing by Subhranshu Sahu)