The BSE Sensex fell 0.9 percent on Thursday, led by export-driven software services companies after bellwether Infosys cut its outlook for revenue citing the debt troubles in Europe.

Sharply better-than-expected industrial output in November failed to bolster sentiment as the data, while providing a glimmer of hope for the battered economy, could allow the RBI to hold off on easing monetary policy.

Infosys fell 8.4 percent to 2,588.25 rupees as investors braced for earnings downgrades by brokerages after the company trimmed its full-year revenue growth outlook for a second straight time and warned of lower client spending because of the crisis in Europe, its second-biggest market.

It was the No. 2 Indian software services exporter's biggest one-day percentage drop in nine months and dragged bigger rival TCS down 4.2 percent and third-ranked Wipro off 2.45 percent.

The guidance is particularly disappointing because the last quarter of the fiscal year to March will have an additional working day due to the leap year, JPMorgan said.

The company has effectively guided for a decline in sequential revenues adjusting for the extra day, it said in a note.

The information technology index fell 6.03 percent to its lowest close since late November.

The main 30-share BSE index ended down 0.86 percent or 138.35 points at 16,037.51, with 10 of its components in the red. The index briefly turned positive after November industrial output rose 5.9 percent from a year earlier, rebounding from a contraction in the previous month.

The industrial production numbers have always been very volatile, said Sunil Sewhani, head of fundamental research at GEPL Capital. So the market does not judge by its one-time rise.

The data is notoriously volatile, and the November figure was above even the highest estimate of the 32 economists in a Reuters poll, which ranged from contraction of 4 percent to expansion of 5.6 percent.

Energy major Reliance Industries closed down 1.5 percent at 736.90 rupees, after HSBC cut its target price on the stock to 800 rupees from 870 saying it expects gas output to decline.

Leading mortgage lender HDFC Ltd ended up 0.95 percent, after its loan book in the December quarter rose 21 percent. Its profit rose 10 percent, lagging estimates due to a sharp fall in income from sale of investments.

In the broader market, there were 743 gainers against 696 losers on volume of almost 717 million shares.

The 50-share NSE index ended down 0.61 percent at 4,831.25, with 14 components in the red.

The MSCI's broadest index of Asia Pacific shares outside Japan was up 0.25 percent at 1044 GMT.

STOCKS THAT MOVED

* Crompton Greaves Ltd (CROM.NS) ended up 5.

* Kavveri Telecom Products Ltd gained 0.3 percent after the company said it signed a 10-year agreement with a leading national mobile operator for wireless solutions.