By Abhishek Vishnoi
MUMBAI (Reuters) - The BSE Sensex fell for a third consecutive session on Wednesday, to mark its lowest close in almost two weeks after Larsen & Toubro slumped nearly 6 percent as its orderbook guidance sparked worries about the health of the domestic economy.
Larsen & Toubro Ltd's (L&T) (LART.BO) guidance has sparked concerns about corporate profits after a mixed set of company results in the January-March quarter and a generally cautious tone about the outlook for Indian companies.
Caution ahead of Wednesday's release of the minutes of the Federal Reserve's last meeting and Chairman Ben Bernanke's testimony in Congress, which got reflected in weaker Asian shares, also aided the declines.
Analysts continue to caution that a nearly 11 percent rally in the BSE Sensex since mid-May has made Indian shares more expensive and tactically overbought for the short term, raising prospects of a near-term correction.
"Market is facing some resistance at higher levels. L&T guidance lacks specifics, which disappointed investors," said Phani Sekhar, fund manager-PMS, Angel Broking.
The benchmark BSE Sensex fell 0.25 percent, or 49.37 points, to end at 20,062.24, falling for a third day and marking its lowest close since May 9.
The broader Nifty fell 0.32 percent, or 19.60 points, to end at 6,094.50
L&T slumped 5.7 percent, marking its biggest single day fall since Jan 2010, after reporting a worse-than-expected 6.9 percent drop in quarterly profit to 17.88 billion rupees.
India's biggest engineering company also expects order inflows to rise about 20 percent this fiscal year, Executive Chairman A.M. Naik said, which according to many analysts, disappointed investors who expected more.
Among other blue-chips Reliance Industries Ltd (RELI.NS) ended 1.2 percent lower, while Tata Steel Ltd (TISC.NS) ended 0.9 percent lower.
Zee Entertainment Ltd (ZEE.NS) also fell 1.4 percent after its January-March profit rose 12.5 percent to 1.80 billion rupees. Analysts said results were largely positive, but attributed the falls to profit-taking.
Lenders such as HDFC Bank Ltd (HDBK.NS) fell, continuing retreats this week after recent sharp gains.
Housing Development Finance Corporation Ltd (HDFC.NS) ended 0.2 percent lower, while HDFC Bank Ltd fell 0.6 percent declining for a fourth day after making its all-time high of 724 rupees on May 16.
However among stocks that gained, United Spirits Ltd (UNSP.NS) rose 3.2 percent after Morgan Stanley resumed coverage with an "overweight" rating, saying new owner Diageo Plc (DGE.L) could put a greater focus on profitable growth for the liquor maker.
Tech Mahindra Ltd (TEML.NS) also rose 3.7 percent after its January-March quarter net profit rose 24 percent, beating estimates.
(Editing by Sunil Nair)