Thu, Jul 24 11:59 AM

MUMBAI (Reuters) - Indian shares fell as much as 1.3 percent on Tuesday, led by export-focused outsourcers such as Infosys Technologies as the rupee strengthened to its highest in more than two months against the dollar.

Top mobile firm Bharti Airtel dropped 0.63 percent to 810.90 rupees, surrendering early gains of 5.5 percent on a forecast-beating 34 percent rise in quarterly net profit, as traders worried about a 1.48 billion rupees mark-to-market loss.

Traders said investors were also closing out some positions after a near 20 percent rise in the main index over the previous five sessions.

"The rupee's gain immediately diminishes the prospects for export-focussed IT firms," Jayesh Shroff, a fund manager at SBI Mutual Fund said. "And with the run-up over the past few days, we should cool and markets would trade in a narrow band."

At 11:13 a.m the 30-share main index was down 0.83 percent, or 122.50 points, at 14,816.0. Earlier it had been up as much as 1.26 percent.

IT bellwether Infosys fell 6.5 percent to 1,499.70 rupees.

Top outsourcer Tata Consultancy Services dropped 6.9 percent to 799 rupees, and the sector index slipped 5 percent.

The Indian rupee strengthened beyond 42 per dollar, taking its gains over the past two days to 2 percent, as falling oil prices eased concerns about the country's trade deficit.

Oil fell to a seven-week low to $124 a barrel amid a view U.S. energy demand has reached a tipping point. Oil, which has contributed to India's inflation woes, has slid more than $23 a barrel from an all-time peak reached on July 11.

Data at 5:30 p.m is expected to show annual inflation rose to 12.03 percent on July 12, which would be the highest since annual numbers in the current series became available in April 1995.

Top listed firm Reliance Industries climbed 0.7 percent to 2,280.60 rupees ahead of its quarterly results.

In the broader market 1,094 gainers pipped 1,082 losers on volumes of 154 million shares.

The 50-share NSE index fell 0.52 percent to 4,453.95 points.

Elsewhere in the region, Karachi's 100-share index eased 0.08 percent to 11,010.67 but Colombo's All share index rose 0.96 percent to 2,379.16.

STOCKS ON THE MOVE

* State-run explorer Oil and Natural Gas Corp rose 3.3 percent to 1,027.20 rupees after oil prices fell. ONGC, which produces 80 percent of India's crude, is required to sell oil at low prices to state-run refiners to keep retail prices low.

* Bliss GVS Pharma Ltd rose by its daily limit of 20 percent to 46.25 rupees after saying its board would meet on July 29 to consider a bonus share issue.

* Personal care products maker Marico Ltd fell 5.6 percent to 56.50 rupees ahead of its quarterly results. A Reuters Poll of brokerages expected net profit to grow but margins were seen under pressure due to rising input cost.

MAIN TOP 3 BY VOLUME

* Reliance Natural Resources Ltd on 34 million shares

* Reliance Power on 9.5 million shares

* IFCI Ltd on 6.9 million shares

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