Sensex heads for first fall in three sessions on profit-booking

MUMBAI (Reuters) - India's stock markets fell on Tuesday, heading for their first decline in three sessions, as investors booked profits in sectors such as banks and capital goods, while sentiment was also hit after data showed exports shrank in January for a 14th straight month.

The falls contrasted with gains in most of the region, which benefitted from a combination of stabilising Chinese markets, rebounding oil prices and solid U.S. consumption data. The NSE Nifty surged 2.6 percent on Monday, its biggest single-day percentage gain in more than a year, as state-run banks recovered from recent losses, but analysts warn overall sentiment remains weak due to poor corporate earnings and caution ahead of the 2016/17 budget due on Feb. 29.

"It is largely to do with good amount of short-covering that had happened yesterday and that had propelled the rally in the market," said Deven Choksey, managing director of KR Choksey Securities.

"I doubt there was any genuine aggressive buying yesterday."

The broader Nifty fell 0.75 percent, while the benchmark BSE Sensex dropped 0.53 percent.

Data late on Monday showed India's exports fell 13.6 percent last month from a year ago on continued weak demand from Europe.

Software services exporters were among the day's losers, with Infosys down 1 percent.

Banking stocks such as State Bank of India , ICICI Bank and Axis Bank were down 1-3 percent as investors booked profits after the BSE Bankex index <.BSEBANK> rose as much as 5 pct on Monday.

Bank of Baroda fell as much as 5.6 percent after the state-run lender rallied 22.55 percent on Monday following positive management comments.

Liquor baron Vijay Mallya's UB Holdings fell as much as 13.4 percent, after Punjab National Bank declared the company as a "wilful defaulter" on Tuesday.

Jindal Steel and Power dropped as much as 5.9 percent after local ratings agency CRISIL downgraded JNSP credit to A4+ from A3+.

(Reporting by Aastha Agnihotri; Editing by Subhranshu Sahu)