BENGALURU, March 11 Reuters Indian shares fell on Monday, weighed down by a decline in banking and Tata Group stocks, while investors booked profits ahead of key domestic and U.S. inflation data.

The bluechip NSE Nifty 50 shed 0.72 to 22,332.65, while the BSE Sensex settled 0.83 lower at 73,502.64.

A lot of investors will close their books in March and take some profit. This will likely lead to selling at record high levels in the next three weeks, said Aishvarya Dadheech, founder and chief investment officer at Fident Asset Management.

Adding to that, regulatory instructions on small and midcap funds and underperformance in the broader small and midcaps could continue, Dadheech added.

The broader, more domesticallyfocussed smallcaps lost 2, underperforming the benchmarks, while midcaps dropped 0.4.

There may be pockets of irrational exuberance in Indian equity markets, the Securities and Exchange Board of India SEBI said on Monday, referring to concerns over stretched valuations and elevated fund inflows into small and midcaps.

The segments have underperformed the Nifty 50 since the markets regulator on Feb. 27 asked mutual funds to disclose more about risks.

On the day, financials, banks, private banks and stateowned banks lost between 0.65 and 2.

HDFC Bank fell 1.27 after CLSA flagged challenges for deposit growth and net interest margin recovery for the private lender.

State Bank of India dropped 1.82 after India39;s top court rejected a plea by the…