Mumbai: Indian shares extended losses to 2% on Wednesday as they caught up with a global slide in markets, with financial stocks leading the losers.
At 12.10pm, the 30-share BSE Index was down 1.87% at 16,465.13 with 28 components declining. It fell as much as 2 percent to a two-month low of 16,442.57.
The 50-share NSE Index was down 2.09% at 4,903.30 points.
Markets dropped more than 1% in the morning morning, on track for a sixth straight loss as the market caught up with a slide in global shares as trade resumed after a holiday, with financial shares leading the fall.
Sector leader State Bank of India fell as much as 4.2% to a four-month low as investors worried about its outlook and asset quality after it reported December quarter results on Monday evening.
State Bank said it expected steady loan growth for the full year but warned that surplus deposits and higher bad debt could impact profits in the March quarter.
In a report, Deutsche Bank said State Bank’s asset quality was still not comfortable though not alarming, and said the bank was likely to face back-ended profit pressures in the process of raising provision coverage to the mandated level.
The bank maintained a “sell” rating on State Bank.
“When bad news is already around, more bad news just adds to the woes. Positives are ignored for a while,” said Daljeet Kohli, head of research for private client group at Emkay Global. “It is fear psychology which is playing right now,” added Kohli.
At 10:03am, the 30-share BSE Index was down 1.07% at 16,600.81, with only six of its components advancing. The 50-share NSE index was down 1.2% at 4,947.40.
It has fallen 4.9% over the previous five sessions, and traded at its lowest in two months on Wednesday morning.
State Bank was down 3.7% to Rs2,015 while top private lender ICICI Bank had fallen 2.5% to 810.Rs45.
Software companies extended losses, on fears US President Barack Obama’s plan to limit risk-taking by banks might hurt their order flow.
Infosys Technologies and Tata Consultancy Services declined nearly 1% and 0.1% respectively, while Wipro shed 0.8%.
In the broader market, gainers outpaced losers in a ratio of 2.1:1 in a volume of 89 million shares.