The BSE Sensex dropped over 180 points in afternoon trading on Friday after SBI reported disappointing asset quality for the second quarter ending September 2012. The broader Nifty traded below the key 5,700 mark and the rupee traded lower against the dollar at 54.48.
At 01.45 p.m., the Sensex traded 0.9 per cent or 169 points lower at 18,677 while the Nifty was down 54 points to 5,684.
SBI, India's biggest lender, traded nearly 4 per cent lower after bad loans rose to 5.15 per cent of its loan book as of the end of September from 4.19 per cent a year earlier.
"Fresh Restructuring of Rs 4,694 crore was a big negative surprise. Lower provisioning is making PAT look good, but overall numbers are not good," Nomura said in a note.
The broader BSE Bankex traded 1.4 per cent lower, the most among all sectoral indices on the BSE. Energy and capital goods stocks also traded with over 1 per cent cut.
On the Nifty, 44 of the 50 shares traded lower. State-run oil explorer ONGC was down 3 per cent after posting a bigger-than-expected fall in July-September net profit due to higher subsidies.
Infra lender IDFC, miner Sesa Goa and state-run power equipment maker BHEL traded with 2-3 per cent losses each.
Shares in United Spirits traded 1.5 per cent higher after hitting their 52-week high in early trade. Investors hope Vijay Mallya's company is nearing a deal to sell a stake to Diageo. Other UB group stocks such as Kingfisher Airlines also traded higher.
Japan's Nikkei fell a four-week closing low, led by exporter shares, as a looming U.S. fiscal crisis threatened to tip the world's largest economy into recession and as uncertainty over a Greek bailout rekindled worries about the euro zone. Exporters, which already face slowing demand for their products due to sluggish global growth, would suffer further hardship should the U.S. fall into recession on the back of the 'fiscal cliff'.
European shares traded flat to negative.
(With inputs from Reuters)