Shares in Steel Authority of India Ltd fall 3.9 percent on worries the government's planned stake sale will have to happen at a discount to attract interest as there are concerns about the company's earnings outlook.

Citigroup last week downgraded SAIL to "sell", noting downside risks to volumes, uncertainty on wages and its dependence on the domestic market, where steel prices may not rise as much as in global markets.

The government is planning to sell a stake in SAIL and other state-run companies including NTPC Ltd in February and March.

Dealers also speculate SAIL could post lower-than-expected margins in the October-December quarter.