Indian shares fall for 2nd day

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MUMBAI, Sept 13 (Reuters): Indian shares fell for a second day in a volatile session on Friday as blue chips including ITC declined after the prime minister's economic panel said it would be a challenge for the government to meet its fiscal deficit target in the current year. Also, traders lightened positions ahead of the U.S. Federal Reserve's decision on stimulus tapering and the RBI policy review next week, even as foreign investors continue to pour money in Indian shares. Foreign institutional investors provisionally bought 9.30 billion rupees ($146.1 million) worth of Indian shares on Thursday, bringing their total to nearly 66.7 billion rupees over the previous six sessions, exchange data showed. India's new central bank chief Raghuram Rajan will detail his first monetary policy review on Sept. 20 with focus squarely on whether the central bank will partly or wholly reverse its cash tightening steps or give an indication on when they might be rolled back. Prior to that, the U.S. Federal Reserve meets on Sept. 17-18 and is expected to trim its bond buying programme. Any delay in the withdrawal of monetary stimulus will give a boost to risk assets. "We believe that some tapering off is already priced in and to that extent, if the actual amount of tapering matches expectation, it may not be taken negatively by the markets," said Dipen Shah, head of private client group research at Kotak Securities. The first meeting of the RBI under the new governor will also be an important trigger for the market, especially the decision on interest rates, Shah added. The benchmark BSE index fell 0.25 percent, or 49.12 points, to end at 19,732.76, after gaining as much as 0.6 percent earlier in the day. The index ended 2.4 percent higher for the week.