Indian shares fell sharply on Monday after a two-week rally, dragged down by declines across banking and metals shares. The BSE S&P Sensex index falling more than 281 points in the morning, amid weakness in Asian peers.

The broader NSE Nifty benchmark fell as much as 21.15 points to touch 11,431.25 on the downside. The Sensex fell 281.99 points to hit 38,563.42 at the weakest level. Losses in banking, metal and pharma stocks dragged the markets lower however buying in IT shares arrested the fall.

The NSE’s Bank Nifty sectoral index – comprising shares of 12 majors banks dragged lower by Yes Bank which plunged 14.45 per cent during the session.

The Sensex index had ended 167.17 points – or 0.43 per cent – lower at 38,822.57 on Friday, and the broader Nifty benchmark settled at 11,512.40, down 58.80 points – or 0.51 per cent – from its previous close.

Below are 10 key updates from the stock market today:

  • Lakshmi Vilas Bank Ltd. shares fell 4.9% to their lowest since April 2009 on after RBI initiated prompt corrective action (PCA) on the lender. Under PCA, banks are mandated to cut lending to corporates and focus on reducing the concentration of loans to certain sectors.
  • Indiabulls Housing Finance, which had proposed to merge with Lakshmi Vilas Bank, slumped 32%.
  • Shares in private-sector lender Yes Bank fell 14%, Nifty declined by 14%. The decline comes despite the bank saying that it has received approval from RBI to increase its authorised share capital in order to raise funds.
  • Another private sector lender RBL Bank also plunged 10%, dragging down the Nifty Bank index by over 10%.
  • The Nifty metals index fell nearly 3%. Tata Steel, Vedanta and JSW Steel lost over 4%.
  • Ajit Mishra, vice president of research at Religare Broking, expects markets to consolidate further. “We feel the upcoming RBI monetary policy review meet could trigger the next directional move. Meanwhile, we suggest continuing with a stock-specific trading approach and focusing more on the index majors for short term trades,” he said.
  • The RBI is widely expected to cut interest rates when it announces monetary policy on Friday.
  • After remaining net sellers for the past two months, foreign investors infused a net ₹7,714 crore into the domestic capital markets in September after corporate tax cut by the government.
  • Foreign portfolio investors poured in a net ₹7,849.89 crore into equities and withdrew a net ₹135.59 crore from the debt segment between September 3-27, translating into a cumulative net inflow of ₹7,714.30 crore.
  • Analysts also add, FPI inflows into India will also be influenced by how the economy performs and how soon corporate earnings recover.

(With input from agencies)