BSE Sensex drops 0.4 percent on Friday, banks slip

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But analysts said India's economy, powered by domestic demand, was better placed to weather a possible slowdown in the United States than other countries in the region that depend on exports.

The benchmark BSE 30-share index ended down 0.44 percent, or 86.53 points, at 19,698.36, with half the components in the red.

The index had fallen for six days in a row to Monday, then rebounded more than 6 percent in the following two days before slipping again. It has risen 4.2 percent on the week.

Deven Choksey, CEO and managing director at KR Choksey Shares & Securities, said the market was consolidating and could remain choppy in the near term on volatile global markets.

New Delhi-based Union Financial's director Gajendra Nagpal said he was upbeat about the outlook and was sticking to a year-end index target of above 20,000.

The index, which hit a series of record highs in the previous two months, has gained 25.7 percent since the U.S. rate cut on Sept. 18 that sparked heavy foreign inflows.

The benchmark has risen nearly 43 percent in 2007 and is only 2.7 percent away from its lifehigh of 20,238.16 hit on Oct 30.

Foreigners have bought shares worth $17 billion so far this year, well above a record $10.7 billion in all of 2005.

CLSA, the Asia-brokerage arm of French lender Credit Agricole, said on Thursday Indian stocks were not overvalued due to strong economic fundamentals and relatively low political risk, especially compared with its neighbours.

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