BSE Sensex slips 0.9 pct; Infosys drops

The BSE Sensex dropped 0.9 percent on Tuesday as euro zone debt worries battered major markets in Asia, with software services bellwether Infosys leading the losses after its quarterly earnings narrowly missed expectations.

Infosys Ltd, India's No. 2 software services exporter, reported a 15.4 percent rise in fiscal first-quarter profit as a surge in wages offset strong demand from western clients.

"The outlook is bearish. We could see some weakness for at least a couple of days, until we see some good results," said Arun Kejriwal, director at research firm KRIS.

At 10:58 a.m. (0527 GMT), the 30-share BSE index was 0.96 percent lower at 18,541.4 points, its third straight session of losses, with all but five of its components losing ground.

Asian equities suffered sharp losses on Tuesday while the euro remained under pressure on escalating worries that the threat of contagion from the Greek debt crisis could lead to more countries requiring financial aid.

Stock markets in Australia, Japan and South Korea lost between 1.35 percent to 2.1 percent, while the MSCI index of Asia-Pacific shares outside Japan fell more than 2 percent.

"The pace at which we went up was something which was unsustainable, the main reason for the rally that we saw was not anything else but because of the fact there was money coming in from foreigners and that pushed the market up," Kejriwal said.

Foreign funds have poured over $2.57 billion in local equities over the last 12 sessions until Friday, data from the market regulator showed, helping the main index rise for three consecutive weeks.

Tuesday's tumble came despite Infosys maintaining its dollar revenue growth forecast at 18-20 percent for the fiscal year ending March 2012. Its shares fell nearly 6 percent.

Also leading the fall was ICICI Bank, India's second largest lender. The broader banking index was 0.7 percent lower as concerns remained on hardening interest rates and slowing economic growth.

Investor focus is on India's May industrial output data due at 11 am (0530 GMT).

India's industrial output probably rose 8.2 percent in May from a year earlier, on a favourable statistical base effect and strong exports and infrastructure growth, the median forecast in a Reuters poll showed.

The 50-share NSE index was down 0.93 percent at 5,563.2 points.

Losers beat gainers 857 to 374 on a volume of about 99.97 million shares in the broader market.

STOCKS ON THE MOVE

* Shares of Essar Oil rose nearly 3 percent, a day after the company reported a net profit of 4.69 billion rupees as against a loss of 0.7 billion rupees the year ago.

Separately, UBS said in a note the company's refinery expansion is on schedule to be completed by September 2011.

* Shares of Madras Cements rose nearly 5 percent after the Times of India reported that the company is in talks with Lafarge and Holcim to divest its cement grinding unit.

(Reporting by Aniruddha Basu; editing by Malini Menon)