Sensex falls in choppy session; earnings, Asian stocks weigh

MUMBAI (Reuters) - The BSE Sensex fell in a choppy session on Tuesday, led by declines in domestic oriented stocks on worries that the remaining January-March quarterly earnings may not meet market expectations while lower Asian stocks also weighed on sentiment.

January-March would mark the fourth straight quarter of disappointing results with low signs of on-the-ground revival in the economy since the election of Narendra Modi as Prime Minister in May 2014.

Investment bank Credit Suisse on Tuesday cut Nifty earning estimates for FY16 and FY17 by 2 percent and 1 percent respectively, citing January-March quarterly earnings so far.

Attractive short-term valuations after more than 10 percent fall from record highs in March, may still lead to tactical bounce, investors said.

"Earning need to follow up in the long run but markets can easily bounce 5 percent from here as they are oversold and the worries on taxes are well discounted," said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

The BSE Sensex fell 0.3 percent, while the broader Nifty lost 0.4 percent after posting its biggest daily gain in more than two months in the previous session.

India VIX, NSE's volatility gauge's gains on Monday alongside shares were already questioning the rationale of the bounce in the previous session. VIX is up 1.6 percent adding to Monday's 0.5 percent rise.

MSCI's broadest index of Asia-Pacific shares outside Japan extended losses and was down 0.5 percent on worries that region's growth is faltering in the face of slowing demand from China.

A survey released on Monday showed China's factories suffered their fastest drop in activity in a year in April as domestic demand weakend. Surveys for Taiwan and Japan also showed factory activity contracted. [ID:nL4N0XT03T]

Domestic oriented stocks lead the declines. ITC lost 1.6 percent while HDFC Bank lost 1.1 percent. ($1 = 63.2100 rupees)

(Reporting by Abhishek Vishnoi; Editing by Anand Basu)