Indian shares fell on Thursday, dragged by financials and energy stocks, as profit booking continued for the second day after a six-session rally.

The blue-chip Nifty 50 index fell 0.72% to 21,896.70, while the BSE Sensex dropped 0.70% to 72,109.65, as of 10:23 a.m. IST.

On Wednesday, they snapped a six-session winning run as domestic investors booked profits.

"Instances of profit booking like we have seen on Wednesday and today are par for the course, as we have reached a point where only significant improvements in earnings growth can drive stock prices and the index," said Raghvendra Nath, managing director at LadderUp Wealth Management.

The energy index, with a weightage of around 13% on the Nifty 50 and comprising mostly state-owned stocks, fell about 1.2%.

CLSA reiterated its "sell" rating on oil marketing companies Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation , citing doubts over the sustainability of current high marketing margins for these companies.

The Nifty Energy index has surged about 49% since late October and is up 16% this year.

BPCL dropped 3% on the day and was the top percentage loser in the Nifty 50.

Financials were down 1%, dragged by the top weighted stock, HDFC Bank, while public sector banks shed 1.3%.

The domestically-focussed and broader small and mid-caps each declined about 0.3%, extending their slide to a third consecutive day.

Sugar stocks such as Balrampur Chini Mills, Shree Renuka Sugars and EID Parry were down between 1% and 3%, after India raised

the floor price that mills must pay for sugar cane in the 2024/25 season.

Space-related stocks such as Mtar Technologies and Mishra Dhatu Nigam, on the other hand, jumped about 7% after the government allowed

100% foreign ownership into its closely-guarded space sector. (Reporting by Bharath Rajeswaran and Nandan Mandayam in Bengaluru; Editing by Savio D'Souza, Sohini Goswami and Dhanya Ann Thoppil)