The BSE Sensex fell more than 1 percent on Wednesday as investors faced up to a poor corporate earnings season, and a populist move to cut petrol prices sent shares in the country's biggest fuel retailers to their lowest levels in two-and-a-half years.

Down:

Down: BSE Sensex

State-run refiners Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) cut petrol prices by about 3.2 percent, the first reduction in three years. Shares in HPCL fell as much as 7.3 percent to their lowest level since May 2009. IOC shed 3.9 percent to a low of over two years, while BPCL shares dropped 6.2 percent to their lowest level in more than 18 months.

There is not a lot of encouraging news at the moment, said Nitin Khandkar at Nitin Khandkar Institutional Research. The markets have gained quite a lot in recent months during the results season... So we were overdue for a correction from higher levels, he added.

At 11 a.m. (0530 GMT), the main 30-share BSE stock index was trading down 1.14 percent at 16,690.31 points. Twenty-two of its components were in the red.

The market has fallen for four straight sessions, thanks to a slide in quarterly earnings across industries in Asia's third-largest economy and a lack of confidence in measures to curb stubbornly high inflation. Shares across Asia fell on Wednesday as signs that rising borrowing costs were affecting AAA-rated France stirred fears that contagion from Europe's debt crisis would spread to the core members of the region.

Automakers topped the gainers in the BSE benchmark index, as the petrol price cut was seen giving respite to drivers' wallets and manufacturers who have seen sales slide in recent months. Mahindra & Mahindra and Tata Motors saw shares rise as much as 2.6 and 2.0 percent respectively. Shares in Tech Mahindra, India's fifth-largest software services firm, fell 3.2 percent early after it warned of a slowdown in spending in Europe, the second-biggest market for India's $76 billion IT industry. The stock later trimmed losses to 1.9 percent.

Troubled airliner Kingfisher Airlines saw its stock rise as much as 2.5 percent as the market reacted well to a defensive attitude from the firm's chairman on Tuesday despite a doubling of the firm's losses in the quarter to end-September.

At 0530 GMT the 50-share NSE index was trading down 1.3 percent at 5,002.00 points.

In the broader market, declines outnumbered gainers in the ratio of 2.4:1, with about 170 million shares changing hands. Among Asian markets, the MSCI's measure of markets other than Japan was down 1.5 percent, while Japan's Nikkei was down 0.6 percent.

STOCKS ON THE MOVE

* Steel Authority of India Ltd fell as much as 6.1 percent after the state-run steel firm was removed from the MSCI India Index.

* Bharti Airtel, India's biggest mobile carrier by subscribers, rose up to 2.6 percent after the firm was added to the MSCI India Index.

* Sintex Industries dropped as much as 9.3 percent after Goldman Sachs removed the firm from its conviction buy list on account of European exposure and foreign currency convertible bonds concerns.

TOP THREE BY VOLUME

* Shree Renuka Sugars on 10.8 million shares

* Idea Cellular on 7.3 million shares

* Suzlon Energy on 6.5 million shares