* Shares headed to post biggest fall in five-and-a-half years
* Shares sell-off triggered by high street expectations
* TCS says saw weakness in demand in some sectors; Latin America
* Q2 net profit at 52.88 bln rupees versus 53.84 bln estimates (Adds share reaction, analyst comment, details)
By Nivedita Bhattacharjee and Sumeet Chatterjee
MUMBAI, Oct 17 (Reuters) - Tata Consultancy Services Ltd , India's biggest software services exporter, posted a 13.6 percent rise in quarterly net profit, but missed analyst estimates on weakness in outsourcing demand in Latin America and in some industrial sectors.
TCS shares fell as much as 8.5 percent on Friday, setting it on course to log its worst single-day fall in nearly five-and-a-half years, in a positive Mumbai market. The stock was up 25 percent this year as of Thursday, more than the main market.
The TCS earnings announcement came after market hours on Thursday.
TCS is part of a $100 billion-plus Indian outsourcing sector that generates about 90 percent of its revenue from providing services such as IT network installation and the development of software applications for overseas clients.
The company has been growing at a faster pace than its local rivals Infosys Ltd and Wipro Ltd in the last couple of years, helped by a stable management and its focus on emerging economies that are stepping up spending on IT services.
"The expectations from Tata Consultancy were very high after Infosys posted strong numbers, so the company missing estimates has come as a disappointment," said Sarabjit Kour Nangra, vice president of research at Mumbai-based Angel Broking.
"But I don't see any concern about TCS's short-to medium-term growth outlook because the main operating metrics like client additions and operating margins are healthy. The outlook for outsourcing demand is also strong."
Infosys, India's second-largest IT services exporter, last week posted a forecast-beating 28.6 percent rise in quarterly profit and maintained its forecast for sales growth for the year ending in March, meeting analyst expectations.
During the quarter ended Sept 30, TCS made a profit of 52.88 billion rupees ($854.46 million), up 13.6 percent from a year earlier but below the average analyst forecast of 53.84 billion rupees, according to Thomson Reuters data.
Sales of the company, which counts counts Cisco Systems Inc and Hewlett-Packard Co among its clients, rose 13.5 percent to 238.2 billion rupees, which also fell short of analysts estimates of 246.6 billion rupees.
Nomura said in a research note that the below-expected sales growth in its fiscal second quarter would make it tough for TCS to meet its guidance that the revenue growth this fiscal year would be better than last year's 16.2 percent rise.
TCS Chief Executive N. Chandrasekaran on Thursday blamed the the earnings expectation miss on an unexpected growth slowdown in Latin America, which had previously been a growth driver among its emerging markets.
He said TCS, part of the salt-to-steel Tata conglomerate, was "positive about the future" as it shifts towards higher margin services including digital technologies like mobile applications and cloud computing.
TCS expects these services to generate at least $5 billion in sales in the next five years. Revenue from digital services at present make up less than 10 percent of the company's annual revenue, which was $13.4 billion in the last fiscal year.
"We are in the growth mode and are pretty positive about the future," Chandrasekaran said, adding TCS sees a strong outsourcing deal pipeline and stable pricing for its services in the next fiscal year.
Separately, TCS also said on Thursday its board had approved a merger with subsidiary CMC Ltd, which gets bulk of its business from the local market. TCS already owned about 51 percent stake in CMC. (Additional reporting by Aman Shah and Abhishek Vishnoi in MUMBAI; Editing by Vincent Baby and Stephen Coates)