Indian shares falter; output data reinforces economic concerns

* BSE ends down 0.07 pct: NSE down 0.04 pct
* Factory output down 0.4 pct in Sept
* United Spirits surges after Diageo stake sale

MUMBAI, Nov 12 (Reuters) - Indian shares ended slightly
lower on Monday after a surprise contraction in industrial
production and other data showing a fall in exports and high
consumer inflation deepened fears about the Indian economy,
hitting capital good stocks especially hard.
However, United Spirits shares posted their
biggest single-day share gain since at least 1995 after its
stake sale to Diageo spurred upgrades from several analysts, who
called the deal "transformational" and a "game changer".

The weak data is due to add pressure on the government to
take more action to revive growth after already announcing a
slew of fiscal and economic measures in September, including
opening up the multi-brand retail sector to foreign investors.
That's especially the case as the Reserve Bank of India has
signalled it won't cut interest rates until the January-March
quarter, shifting the focus to the parliament session due to
re-start on Nov. 22.
"Focal point for the near term direction would remain how
the parliament session goes," said Aneesh Srivastava, Chief
Investment Officer of IDBI Federal Life Insurance.
"Focus would be on decision making and reforms," he said.
India's benchmark BSE index fell 0.07 percent, or
13.34 points, to end at 18,670.34.
The 50-share NSE index fell 0.04 percent, or 2.55
points, to 5,683.70.
Both indexes fell for a third consecutive session.
Markets will be opened on Tuesday for a short trading
session during the Diwali public holiday, and will close on
Wednesday.
Capital good stocks were among the day's leading decliners
after industrial output unexpectedly fell 0.4 percent in
September, well below expectations for a 2.8 percent advance.

The manufacturing output slumped 1.5 percent from a year
earlier, the data showed, sending Larsen & Toubro Ltd
, India's top construction and engineering company,
down 0.9 percent.
Smaller rival Punj Lloyd Ltd fell 1.4 percent.
Other data on Monday showed India's trade deficit last month
reached $20.9 billion as exports fell but imports jumped, while
consumer price inflation rose 9.75 percent in October.

Companies posting weak earnings also suffered on Monday.
Tata Steel Ltd fell 1.7 percent after reporting a
surprise July-September loss on Friday as weakening demand and
prices in its main European market offset a solid performance at
home.
Shares in Tata Steel, which also said it did not expect an
improvement any time soon due to weak market conditions, have
fallen 4.9 percent over the past two sessions.
Coal India, the world's largest coal producer,
fell 0.6 percent after it narrowly missed estimates with a 19
percent rise in second-quarter profits on Friday.

Jaypee Infratech, which builds roads and other
infrastructure projects, retreated 1.6 percent after saying on
Monday its July-Sept net profit fell 41.8 percent from a year
earlier.
However, among gainers, United Spirits surged 34.7
percent, hitting earlier its highest since January 2008 after
Morgan Stanley, J.P.Morgan and CLSA raised their ratings to the
equivalent of a buy.
Brokerages said United Spirits will substantially cut its
debt and improve its profits after agreeing to sell a 53.4
percent stake to Diageo for $2.1 billion.

State Bank of India rose 1.6 percent after Standard
Chartered said India's biggest lender over-estimated its gross
slippage for the July-September quarter, according to an email
sent to clients.
The rise in bad debts reported as part of its July-September
earnings had sent SBI shares down 3.9 percent on Friday.

Shares in L&T Finance Holdings Ltd, a unit of L&T,
surged 11.6 percent on hopes it would be a strong contender to
earn a banking license, after a senior Finance ministry official
on Thursday said India could allow new banks by the end of
2012/13 fiscal year.
IDFC Ltd, another company seen as a strong
contenders for a banking license, rose 2.9 percent.

FACTORS TO WATCH
* Euro falls to 2-month low versus safe-haven Swiss franc
* Brent edges towards $109, U.S. fiscal worries weigh
* Shares dip on U.S. fiscal cliff, Greece woes
* Foreign institutional investor flows
* For closing rates of Indian ADRs

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(Additional Reportoing by Abhishek Vishnoi; Editing by Rafael
Nam)