The Benchmark Index of the Bombay Stock Exchange (BSE), Sensex has tanked 737 points to 37,929.89 points on Tuesday in a volatile trade.
The National Stock Exchange benchmark index, Nifty slumped as much as 226.55 points to hit 11,247.90 at the lowest level of the day. The major setback was experienced on banking stocks which dragged the markets lower. A deepening crisis at Punjab and Maharashtra Co-Operative Bank highlighted concerns about the health of the country's financial sector.
Forty four stocks on the 50-scrip Nifty traded in the negative zone at the time. Reliance Industries, SBI, IndusInd Bank and ICICI Bank were the top drags on Sensex, wiping out nearly 300 points from the index.
Other laggards on the index were Yes Bank, Zee Entertainment, IndusInd Bank, SBI and Grasim, trading between 5.49 per cent and 26.09 per cent lower. The Nifty Bank - comprising shares of 12 major lenders in the country - fell 3.52 per cent during the session, with Yes Bank and SBI dropping as much as 23.79 per cent and 8.66 per cent respectively.
Punjab Maharashtra Co-Operative Bank managing director Joy Thomas admitted to misleading the RBI for six years by concealing and misreporting default on loans reportedly worth more than Rs. 6,000 crore taken by Housing Development and Infrastructure (HDIL).
Analysts say the decision by the Reserve Bank of India in its upcoming bi-monthly review will be monitored closely. The Reserve Bank of India's Monetary Policy Committee began a three-day bi-monthly meeting on Tuesday. Many economists expect the central bank to announce a rate cut on Friday.