Sensex falls as Infosys drags IT firms lower

(Reuters) - Indian shares fell on Tuesday as software services exporters declined after Infosys said Royal Bank of Scotland had cancelled a contract, sparking renewed concerns about the outlook for the sector.

But broader losses were capped as State Bank of India rose as much as 1.89 percent after the country's biggest lender by assets reported a smaller-than-expected rise in bad loans on Friday.

Analysts said investors also took in their stride data released on Friday showing a faster-than-expected acceleration in consumer inflation to 6.07 percent last month, given expectations that above-average monsoon rains would cool down food prices.

Markets were closed on Monday for a public holiday.

"Market is basically wanting to play on individual stocks viz-a-viz the indices," said Deven Choksey, managing director at KR Choksey Securities.

"On the index front, it's more of a flat market."

The broader NSE Nifty <.NSEI> was down 0.59 percent at8,620.65 as of 0653 GMT, after gaining 0.12 percent earlier in the session.

The benchmark BSE Sensex <.BSESN> was 0.57 percent lower at 27,991.56, after posting a gain of 0.26 percent for the last week.

Shares of Infosys fell as much as 3.25 percent to their lowest since Dec. 9, 2015 after RBS cancelled a contract to provide IT services to the bank's UK unit, Williams & Glyn.

Infosys shares have slumped about 10 percent since the company on July 15 cut its revenue target for the fiscal year.

Other IT services providers also fell, with Tata Consultancy Services down 1.26 percent.

Among gainers, shares of Power Grid Corp rose as much as 2.8 percent to a record high on expectations of higher June-quarter profit.

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