UPDATE 5-Satyam chief quits, fraud scandal slams shares
* Chairman quits, says profits inflated
* Shares dive 78 pct in Mumbai
* Banker Merrill Lynch terminates Satyam ties
* NYSE halts trade in Satyam's shares (Adds company comment, NYSE halt, background)
BANGALORE, Jan 7 (Reuters) - The head of Indian outsourcing company Satyam Computer Services (SATY.BO) (SAY.N) resigned on Wednesday, disclosing that profits had been falsely inflated for years and sending its shares plunging nearly 80 percent.
India's biggest corporate scandal in memory threatens future foreign investment flows into Asia's third-largest economy and casts a cloud over growth in its once-booming outsourcing sector.
The news sent Indian equity markets into a tailspin, with Bombay's main benchmark index tumbling 7.3 percent and the Indian rupee fell.
The New York Stock Exchange halted trading in Satyam's shares indefinitely, saying it wanted to review the news. Continued...
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