* BSE index falls 0.27 pct; NSE index down 0.47 pct
* Pharma, consumer goods fall; banks, metals and miners gain
* Overseas investors turn sellers for the sixth session
By Indulal PM
MUMBAI, Dec 17 (Reuters) - Indian shares edged lower on Wednesday as volatility in global markets raised fears of more foreign selling, although indexes cut earlier losses of more than 1 percent as state-run Life Insurance Corporation of India bought shares aggressively.
LIC, a powerful market player in India that has been known to support markets at times of vulnerability, was seen buying into banks, software services and defensive stocks, traders said.
An LIC spokesman said the insurer does not comment on market speculation.
Buying by the state-run insurer helped pare earlier losses of as much as 1.3 percent for the broader NSE index in a session marked by continued concerns that foreign investors would sell out of emerging markets due to the brewing financial crisis in Russia.
Overseas investors sold shares worth 12.47 billion rupees ($196.6 mln) on Tuesday, their biggest daily net sales since Oct. 17, and have been net sellers for six consecutive sessions, according to regulatory data.
"There was good buying after a sharp fall. We see markets are bottoming out. It should be range-bound for the time being," said Suresh Parmar, head of institutional equities at KJMC Capital Markets."
The NSE index ended 0.47 percent down at 8,029.80 points. The benchmark BSE index closed 0.27 percent lower at 26,710.13 points, after having fallen 1.2 percent earlier in the day.
Both the indexes fell for a fifth consecutive session, matching a five-day losing streak in July.
Recent outperformers fell, with ITC Ltd ending down 2.3 percent as investors booked profits. The stock had gained 8.1 percent so far this month as of Monday compared with a 4.3 percent fall in the NSE.
Pharmaceutical companies slumped on concerns about the global economy, even as they stood to benefit from a weaker rupee. Sun Pharmaceutical Industries closed down 2.3 percent, while Cipla Ltd ended 2.9 percent lower.
However, strong buying emerged in banks, especially State Bank of India, which closed 2.1 percent higher at 301.75 rupees.
Other banking stocks also gained. ICICI Bank ended 0.5 percent higher, while Bank of India gained 1.8 percent.
Shares in Tata Steel ended 1 percent higher after a government official said the company might be allowed to resume production from its biggest iron ore mine this month.
Mining stocks also gained. Sesa Sterlite, which fell 16.32 percent so far this month till Tuesday, ended 3.8 percent higher.
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FACTORS TO WATCH * Dollar pulls away from lows as it awaits the Fed * Oil below $60 as OPEC, Russia keep pumping * Russia turmoil sparks flight to safety * Foreign institutional investor flows * For closing rates of Indian ADRs
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