Sensex drops amid global concerns; inflation data awaited

REUTERS - The BSE Sensex fell more than 1 percent on Monday and was headed for its third straight session of losses on renewed worries about the impact of Britain's June 23 referendum on whether to leave the European Union and about upcoming central bank meetings.

Asian markets slumped after a survey on Friday put the 'Leave' campaign 10 points ahead, although two polls on Saturday showed voters were still closely divided, underlining the contradictory polling less than two weeks before the referendum.

Meetings of the U.S. Federal Reserve, Bank of England, Swiss National Bank and the Bank of Japan are also awaited this week. All are likely to keep monetary policy steady.

At home, investors were also spooked after data released late on Friday showed India's industrial output unexpectedly fell in April, the first contraction in three months.

Investors' focus will now shift to the consumer price data due to be released later in the day, with analysts expecting it to have edged up for a second straight month in May.

"FII (foreign institutional investor) flows have been quite healthy now, at least for the last couple of months, driven by lot of positivity in India. But this exit ('Brexit') would overshadow all the positives for India, so you would expect FII flows to revert back," said Ravi Sundar Muthukrishnan, co-head Institutional Equity Research, ICICI Securities.

The broader NSE Nifty was down 0.88 percent at 8,097.80 as of 0754 GMT, after falling as much as 1.3 percent to its lowest since May 26 earlier in the day. It lost 1.25 percent in the previous two sessions, and had hit a more than seven-month high on Tuesday.

The benchmark BSE Sensex was 1.09 percent lower at 26,346.08, after declining as much as 1.4 percent.

Shares of industrial companies Larsen & Toubro Ltd , Bharat Heavy Electricals Ltd , Power Grid Corp of India fell after disappointing industrial production data.

Among other losers, Tata Steel fell 3.3 percent after Goldman Sachs downgraded the stock to "sell" from "neutral", saying most potentially positive catalysts for it had already been priced in.

(Reporting by Tanvi Mehta in Bengaluru; Editing by Subhranshu Sahu)