Monday August 31, 11:20 AM

BSE Sensex falls 0.9 pct; L&T, Infosys drop

MUMBAI (Reuters) - The BSE Sensex (^BSESN : 16632.01 -222.92) fell 0.9 percent on Monday, as investors cashed in profits after the market jumped 7.5 percent over the past 1-½ weeks and as weak Asian peers weighed on sentiment.

Engineering and construction firm Larsen & Toubro (LT.NS : 1589.45 -41.65), which fell 1.8 percent to 1,585.50 rupees, and No. 2 outsourcer Infosys Technologies (INFOSYS.BO : 2328.3 -58.55), which dropped 2.3 percent to 2,136.50 rupees, led the losses.

Energy giant Reliance Industries (RELIANCE.NS : 1045.95 -17.8), which has the most weight in the main index, dropped 1.1 percent to 2,046.95 rupees.

Top telecoms firm Bharti Airtel (BHARTIARTL.BO : 283.65 +2.65), which is in exclusive merger talks with South Africa's MTN, slid 0.9 percent to 430.80 rupees.

State-run explorer Oil and Natural Gas Corp bucked the trend and rose 1 percent to 1,191 rupees, after it said late on Friday it had discovered gas at a block in Tripura.

By 10:33 a.m. (0503 GMT), the 30-share BSE index was down 0.9 percent at 15,779.30 points, with 23 stocks declining, after falling as much as 1.4 percent.

"This may be just a temporary blip. As Asian markets are lower, we are also retreating," Hemant Thukral, vice president at Asian Markets Securities, said.

"We see that there is more interest from market participants, and there may still be some buying left."

On Friday, the benchmark had gained for the seventh day in a row for the first time in 4-½ months, and finished at itsstrongest since Aug. 3, when it had closed at a 14-month high.

Equity markets worldwide have been boosted recently by a view the global economy was on the road to a sustainable recovery.

The BSE index is up 1.9 percent in August, having been down more than 6 percent earlier in the month on worries about a weak monsoon, high valuations and looming inflation.

Having priced in a global upturn, investors are still looking for more signs world growth can be sustained once the impact of massive government stimulus spending fades, some analysts say.

There are also worries stocks may have moved ahead of economic fundamentals and could be due for a correction.

Investors will also be awaiting data on India's April-June GDP growth, which is forecast to be up 6 percent from a year earlier. The data is expected at about 11 a.m. (0530 GMT).

India may have seen accelerating growth in the June quarter thanks to stimulus measures, but drought in nearly half of the country's districts and the global slump could hinder faster recovery.

The fiscal deficit data is due at 4 p.m. (1030 GMT).

In the broader market, gainers led losers 1,138 to 858 on relatively light volume of 94.7 million shares.

The 50-share NSE (^NSEI : 4941.75 -63.8) index was down 0.9 percent at 4,691.20.

Asian shares were lower, with Japan's Nikkei down 0.1 percent, while MSCI's measure of other Asian markets fell 1.1 percent.

MAIN TOP 3 BY VOLUME

* Unitech on 8.6 million shares

* Mahindra Satyam (SATYAM.BO : 90.55 -2.2) on 4.3 million shares

* IFCI on 3.3 million shares

STOCKS ON THE MOVE

* Cairn India, a unit of UK-based Cairn Energy Plc, gained 4.3 percent to 271.20 rupees after the company on Saturday began pumping crude from its Mangala oil field in the Rajasthan block, the first major crude oil discovery in India in two decades.

* Non-ferrous metals producer Sterlite Industries shed 2.4 percent to 679.05 rupees as copper prices in Shanghai fell more than 2 percent on Monday, after hitting a fresh 11-month high in early trade, with investors becoming cautious about the outlook for economic recovery and sluggish demand.

* Allied Digital Services Ltd rose 1.1 percent to 506 rupees after its board on Friday approved raising up to $50 million from institutional investors, and split each share into two.

The company will also issue 100,000 shares to Bennett Coleman

& Co Ltd., it told the stock exchange on Monday.