Indian shares fall; nerves spooked by broker trading misfire

* BSE ends down 0.63 pct, NSE falls 0.7 percent

* Erroneous trades dented market sentiment

* Indexes had earlier hit multi-month highs

By Manoj Dharra

MUMBAI, Oct 5 (Reuters) - Indian shares fell on Friday, snapping a four-day rise, as profit-taking hit recent out-performers such as ICICI Bank, while sentiment was also hit after dozens of erroneous orders by a financial firm triggered a brief halt in the NSE index.

The National Stock Exchange index

suddenly dropped by more than 900 points to a session low of 4,888.20 points -- 15.5 percent below Thursday's close -- after Emkay Global Financial Services

placed dozens of erroneous orders worth more than $125 million.

The sudden fall shook nerves, although analysts had already expected a session of falls after the impact from India's latest reform measures, targeting the insurance and pension sectors, was expected to fade.

Traders expressed concerns the financial measures announced on Thursday would face an uncertain fate in parliament. On top of that, caution also prevailed ahead of the U.S. monthly jobs data due out later in the day.

"Irrespective of today's fall on erroneous trades, market should remain range-bound as most of the reforms are already announced," said Deven Choksey, managing director at K R Choksey Securities

"A time correction is possible till November when the winter session of the parliament begins," he adds

The BSE index

fell 0.63 percent, of 119.69 points, to end at 18,938.46 points after earlier in the session hitting its highest intraday level since May 2 2011.

The 50-share NSE index

fell 0.7 percent, or 40.65 points, to end at 5746.95 points, having hit its highest intraday level since April 28 2011 shortly after trading resumed after the halt.

The drop in the NSE index comes after a powerful run, with the index gaining 0.8 percent for a fifth consecutive weekly gain.

The BSE added 0.94 percent for the week.

The rally has been sparked by a slew of big ticket fiscal and economic reforms announced by the government since last month, and the prospect of increased liquidity from global monetary stimulus measures.

Some financial stocks, which make up more than a fifth of the exchange's value, fell sharply before trading was halted, including State Bank of India


Later, recent outperformers were hit, with ICICI Bank

shares falling 1.7 percent after gaining 3.12 percent in the previous two sessions.

Infrastructure-related stocks also declined after a recent surge. Power equipment maker Bharat Heavy Electricals Ltd

fell 0.9 percent after adding 7.82 percent in the previous 3 sessions, while Infrastructure Development Finance corp

fell 2.4 percent.

Emkay, the financial services firm behind the erroneous trades, slumped by the daily limit of 10 percent.

Mortgage lender HDFC

dropped 5 percent after Carlyle Group sold a 3.7 percent stake for $841 million at a 3.5 percent discount to Thursday's closing share price.


fell 1.9 percent, ending down for a third consecutive session, as the appreciating rupee is raising worries about a potential hit to its income from overseas.

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* For closing rates of Indian ADRs

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(Additional reporting by Abhishek Vishnoi)

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