* BSE index down 0.3 pct, NSE index 0.2 pct lower
* Idea, InterGlobe fall on weak quarterly earnings
* Investors await cenbank policy outcome
By Arnab Paul
July 31 (Reuters) - Indian shares fell on Tuesday after the recent record-setting spree, dragged by financials such as Housing Development Finance Corp Ltd and Axis Bank Ltd , as investors focussed on the central bank’s bi-monthly policy meeting that will end on Wednesday.
Economists in a Reuters poll were almost evenly split over the next rate hike while inflation has been above the central bank’s medium-term target of 4 percent for eight months and is expected to stay that way through to the end of next year.
“Market will be bracing itself for a rate hike this time or the next quarter but don’t think there’ll be a substantial damage,” said Sunil Sharma, chief investment officer at Sanctum Wealth Management.
“It’s not going to be a series of rate hikes, just two or at the most three, depending on crude prices, but even then a third hike is unlikely.”
Asian shares erased some of their early losses as easy monetary policy from the Bank of Japan (BOJ) is seen as positive for risk assets although a global rout in technology shares put a lid on gains.
The BOJ pledged to keep interest rates “very low” for the time being following its two-day board meeting. It also took measures to make its massive stimulus programme more flexible, reflecting its forecast that it would take time for inflation to hit its 2 percent target.
Investors will next turn their attention to the U.S. Federal Reserve’s policy meeting which will end on Wednesday.
The broader NSE index was down 0.20 percent at 11,296.6 as of 0649 GMT after three straight record-setting sessions.
The benchmark BSE index was 0.25 percent lower at 37,400.49, following five consecutive record-setting sessions.
For the month, both indexes have gained more than 5 percent.
The Nifty Bank index fell half a percent after adding 3.2 percent in the previous four sessions of gains. IDFC Bank Ltd and Axis Bank were among the top losers, shedding 2.8 percent and 1.9 percent respectively. Both lenders had reported their June-quarter results on Monday.
HDFC fell 2.6 percent, making it the top drag on the NSE index.
InterGlobe Aviation Ltd plunged 11.4 percent after the operator of India’s biggest airline IndiGo said on Monday its June-quarter profit fell 97 percent from a year earlier.
Idea Cellular Ltd slumped 6.3 percent after the telecom company reported a lower revenue for the June quarter on Monday.
Among gainers, Avenue Supermarts Ltd rose 4.4 percent to a record after posting a 43 percent surge in June-quarter profit on Monday.
Tech Mahindra Ltd gained 4.3 percent on the back of strong quarterly results. (Reporting by Arnab Paul in Bengaluru; Editing by Subhranshu Sahu)