(Reuters) - The BSE Sensex fell as much as 1.8 percent to its lowest level in three weeks on Thursday amid heightened concerns about a deepening slowdown in Asia's third-largest economy and a weakening currency that may hit the profitability of many firms. Bharti Airtel (BRTI.NS), the country's top mobile operator, and software exporter Infosys (INFY.NS) led the losses amid a widespread sell-off, which saw all but six of the 30 components of the benchmark index losing ground. Investor sentiment was also dented by a global flight from riskier assets on worsening debt problem in the euro zone after a European Union summit last week failed to produce a solution to the crisis. By 12.32 p.m. (0702 GMT), the main BSE index was down 1.3 percent at 15,675.18 points, after having fallen as much as 1.8 percent earlier to its lowest level since November 24. "There are multiple concerns that are hovering over the market and they are unlikely to go away any time soon," said Dipen Shah, head of private client group research at Kotak Securities. "We need to see some policy action by the government and some stabilisation in the rupee before the market comes back again." The BSE index has dropped more than 23 percent this year, making it the worst performing major global market followed by Hong Kong's Hang Seng index which is down nearly 22 percent, Thomson Reuters data showed. The Indian market index is on course to log an annual fall, after more than doubling its value in the last two years. Local shares have been battered this year as surging inflation and interest rates dimmed the growth outlook for the economy and corporate earnings. The global economic uncertainty has also pushed investors away from risky assets. Foreign funds are net sellers of $300 million of Indian shares this year until Tuesday, in sharp contrast to a record investment of more than $29 billion in 2010. The domestic economic gloom deepened on Wednesday as figures showed a record low rupee is adding to the Indian central bank's inflation headache and an adviser to the prime minister said there was little that could be done to check the rupee's slump. Finance Minister Pranab Mukherjee said on Thursday India needed practical solutions to address its economic slowdown. The rupee sank to a new record low of 54.30 versus the dollar, taking losses to nearly 20 percent from its July high. A sharply weaker rupee is threatening to eat into the profit of a large number of Indian companies by raising their costs for importing goods and input components as well as increasing the dollar borrowing costs. Shares in Bharti Airtel fell as much as 4.2 percent to 334 rupees, their lowest level in nearly nine months. Citigroup said in a report released on Thursday chances of Bharti raising call tariffs looked modest as the company was unlikely to let the trend of loss in market share persist for a long time. Infosys, the second-largest software services exporter, was down 1.9 percent to 2,687.75 rupees on worries about technology spending by overseas clients due to uncertainty about the global economic growth. Although a weaker rupee is positive for the profit margins of Indian software exporters that get more than half of their revenue from the United States, there are concerns about demand for outsourcing as firms in the United States and Europe adopt caution. Shares in Infosys' rivals Tata Consultancy Services (TCS.NS) and Wipro (WIPR.NS) lost 2 percent and 3 percent, respectively. India's top two lenders State Bank of India (SBI.NS) and ICICI Bank (ICBK.NS) fell 2.2 percent to 1,746 rupees and 1.6 percent at 693.35 rupees, respectively, a day ahead of the central bank's review of monetary policy. With inflation stubbornly above 9 percent, the central bank is widely expected to keep rates on hold on Friday. A series of rate increases since early last year has worsened the outlook for credit growth and asset quality of local banks. The 50-share NSE index was trading down 1.4 percent at 4,698.10 points. In the broader market, there were nearly six losers for every gainer on robust volume of 289 million shares. STOCKS TO WATCH * Adani Power (ADAN.NS) was up 1.4 percent at 74.40 rupees, after the company said it planned to synchronise two units each of 660 MW at Tiroda in western Maharashtra state in the current fiscal year. * Crisil (CRSL.NS) was trading 1.5 percent lower at 890 rupees, a day after the credit rating and research firm said it would buy back shares worth up to 800 million rupees at a maximum price of 1,000 rupees per share. * Petron Engineering Construction (PEEC.NS) was up nearly 1 percent at 264.40 rupees after the company said it had received orders worth 316 million rupees from Lanco lnfratech (LAIN.NS). (Reporting by Sumeet Chatterjee; editing by Malini Menon)

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