The alleged fraud, by far the biggest ever detected by a local bank, is centred around companies linked to billionaire jeweller Nirav Modi and his uncle Mehul Choksi, owner of Gitanjali Gems Ltd.
Investor sentiment was also tepid ahead of domestic economic data including October-December quarter gross domestic product (GDP) and fiscal deficit. A Reuters poll forecast GDP expansion at 6.9 percent, the fastest in 2017.
"There is caution ahead of the economic data, but it is expected to be positive," said Vinod Nair, head of research at Geojit Financial Services.
"If the data is as expected, there could be some consolidation, and apart from the uncertainties around PSU banks, the outlook overall for the near term is positive."
Shares of Ambuja Cement Ltd fell 4.8 percent while ACC Ltd was down 2.2 percent after the companies late on Monday said they had put on hold plans for a proposed merger.
Among the gainers, oil explorers Oil and Natural Gas Corporation Ltd and Reliance Industries Ltd rose 2.1 percent and 1.8 percent respectively on higher oil prices. (With Reuters Inputs)