* BSE index down 0.62 pct, NSE index lower 0.72 pct
* Most sectors in the red
* IT, pharma stocks gain
MUMBAI, Aug 12 (Reuters) - Indian shares fell more than one percent on Wednesday, hitting a two-week low, as uncertainty over the fate of a key nationwide tax bill and global volatility following devaluation of the Chinese yuan weighed on blue chips.
Investors said the passage of the goods and services tax bill might get delayed amid continued protests by the opposition with Thursday being the last day for the current session of the Indian parliament.
In addition, China's unexpected move to devalue its currency on Tuesday has dragged down global equity and currency markets.
China's yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it in a move that sparked fears of a global currency war and accusations that Beijing was unfairly supporting its struggling exporters.
"Definitely, the parliament impasse and Chinese currency devaluation are making an impact," G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm said.
The BSE index was down 0.62 percent while the NSE index fell 0.72 percent to their lowest since July 29.
Indian investors are also keeping a close eye on retail inflation data that will be published later on Wednesday.
Inflation likely cooled in July as food price rises stayed in check, while factory output grew slightly faster in June, a Reuters poll found this week.
The central bank could lower interest rates if inflation falls by at least 50 basis points, Chokkalingam said.
Blue chip stocks led the declines. ICICI Bank fell 3.6 percent while Coal India slumped 7 percent.
Oil refiners fell on worries gross refining margins and inventory gains will come off in the July-Sept quarter.
Indian Oil Corp fell 5.5 percent, Hindustan Petroleum Corp lost 4.8 percent, while Bharat Petroleum Corp fell 4 percent.
Most sectors were trading in the red, except IT and pharma stocks, with Infosys up 2.9 percent, TCS gaining 3.2 percent and Sun Pharma rising 3.7 percent.
The rupee was down to its lowest since Sept. 2013.
For more stocks on the move see (Reporting by Karen Rebelo; Editing by Biju Dwarakanath)