Updates for morning trade

By Vivek Kumar M and Bharath Rajeswaran

May 22 (Reuters) - India's benchmark indexes dropped about 1% in early trade on Thursday, as concerns over U.S. fiscal policy and elevated Treasury yields sapped global investor sentiment.

The Nifty 50 .NSEI was down 0.92% at 24,585.65, as of 10:07 a.m. IST, while the BSE Sensex .BSESN also dropped 0.9% to 80,864.99.

The broader, more domestically focused, small-caps .NIFSMCP100 and mid-caps .NIFMDCP100 fell 0.1% and 0.4%, respectively.

All 13 major sectors were in the red, with information technology .NIFTYIT stocks, which are heavily reliant on U.S. revenue, down 1%.

"Any meaningful slowdown in the U.S. economy will impact IT spends by U.S.-based companies, which will be negative for Indian IT sector," said Shrikant S Chouhan, head - equity research at Kotak Securities.

U.S. President Donald Trump's massive tax and spending bill, which could add about $3.8 trillion to the U.S. debt pile, was approved by the House of Representatives on Wednesday, setting up a floor vote for passage to occur within hours.

The worries of a worsening fiscal outlook in the world's biggest economy pushed longer-dated U.S. Treasury yields to their highest point in 18 months.

Treasury yields have been on the rise since Moody's downgraded the U.S. credit rating last Friday.

Rising Treasury yields tend to make bonds more attractive to foreign investors, driving out capital from stocks in emerging markets such as India.

The market is likely to reset lower on concerns over U.S. economy, heightened tariff-related uncertainties, said Sandeep Bagla, chief executive officer of TRUST Mutual Fund.

IndusInd Bank INBK.NS traded volatile after reporting a record quarterly loss, stemming from suspected employee fraud that caused accounting lapses — issues the country's fifth-largest private lender had disclosed earlier.

The stock opened lower and dropped nearly 4% before reversing course to gain more than 3%.

Colgate-Palmolive (India) COLG.NS dropped 5.6% as it posted lower fourth-quarter profit on soft urban demand and intensified competition.

(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Sonia Cheema and Sherry Jacob-Phillips)

((VivekKumar.M@thomsonreuters.com;))