The S&P BSE Sensex and NSE Nifty 50 indexes fell for second session in a row on Monday as banking shares came under intense selling pressure after the Reserve Bank of India on Friday warned that the bad loan ratio in the banking industry could rise to at least 12.5 per cent by March 2021, from 8.5 per cent in March 2020. The Sensex fell as much as 359 points and Nifty 50 index briefly dipped below its important psychological level of 11,100. However, gains in Infosys and Reliance Industries provided support for the markets at lower levels which helped benchmarks to recover losses partially.
The Sensex ended 194 points to close at 37,934.73 and Nifty 50 index declined 62 points to settle at 11,132.
Banking shares were worst hit as weak earnings by ICICI Bank and Kotak Mahindra Bank and rising bad loan warning ratio from the Reserve Bank of India led to an intense selling in banking shares. The gauge of banking shares on the National Stock Exchange - Nifty Bank index slumped 813 points or 3.6 per cent.
Financial services, FMCG, media, pharma and realty sector shares also witnessed selling pressure.
On the other hand, IT shares witnessed buying interest.
Mid- and small-cap shares also witnessed selling pressure as the Nifty Midcap 100 and Nifty Smallcap 100 indexes fell 1.3 per cent and 0.6 per cent each respectively.
ICICI Bank was the top Nifty loser, stock dropped 6 per cent to close at Rs 358.70 after provisions for bad loans by the country's third largest private bank by market capitalisation rose sharply to account for the impact of the coronavirus pandemic. The lender said it made additional provision to the tune of Rs 5,550 crore related to Covid-19, with the objective of completely cushioning the balance sheet from the impact of the pandemic.
Zee Entertainment, HDFC Bank, State Bank of India, Axis Bank, Sun Pharma, Bajaj Finance, Cipla, Grasim Industries, ITC and Tata Motors were also among the losers.
On the flipside, Asian Paints, HCL Technologies, Infosys, UltraTech Cement, TCS, BPCL and Tata Steel were among the gainers.
The overall market breadth was extremely negative as 1,809 shares closed lower while 870 ended higher on the BSE.