Updates for morning trade

By Bharath Rajeswaran and Vivek Kumar M

Feb 6 (Reuters) - Indian shares fell on Friday, dragged by IT companies tracking a global tech selloff on worries of disruption, while investors awaited the central bank's policy decision and commentary amid expectations of a rate pause.

The Nifty 50 .NSEI was down 0.36% at 25,549.4, while the BSE Sensex .BSESN shed 0.31% to 83,048.42, as of 9:42 a.m. IST.

Fifteen of the 16 major sectors opened lower. The broader small-caps .NIFSMCP100 and mid-caps .NIFMDCP100 fell 1.3% and 0.9%, respectively.

IT index .NIFTYIT fell 2.1%, tracking a global tech sell-off on concerns over potential artificial intelligence disruption in the sector.

Other global markets tumbled overnight while Asian markets .MIAPJ0000PUS fell 0.8% on the day, dragged by technology stocks. The sector has come under pressure after AI updates from U.S. firm Anthropic intensified fears of disruption.

While India does not have pure-play AI-linked companies, rapid advances in AI could hurt the application services segment, which accounts for 40%-70% of revenue, weighing on earnings growth on domestic IT firms, according to multiple brokerages.

The IT index .NIFTYIT is down 6.6% this week, on course to register its steepest weekly drop in four months.

Meanwhile, markets await the Reserve Bank of India's policy decision at 10:00 a.m. IST, in which it is expected to keep key interest rate unchanged, supported by benign inflation and easing worries over U.S. tariffs after budget measures to boost manufacturing and exports, and a trade deal with Washington.

While the rate pause is anticipated, "there is clamour from banks to ease liquidity coverage ratio $(LCR)$ rules," said Suresh Ganapathy, managing direction, head of financial services research at Macquarie Capital.

"The problem today is that there is continuous pressure on state-owned banks to show higher credit growth and their deposit growth is lagging, creating a distortion. If you relax LCR rules, then the yield curve will be under pressure," Ganapathy said, adding that the RBI is "really in a catch 22 situation."

Among individual stocks, Nykaa FSNE.NS rose 4.4% after posting a net profit that more than doubled year-on-year in the December quarter on surge in demand for skincare and makeup products.

Life Insurance Corporation of India LIFI.NS rose 5.3% after reporting higher third quarter profit helped by tax cuts which boosted insurance demand.

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema and Rashmi Aich)

((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))