Shares of banks and NBCFs plunged in the early trade on Monday as the sharp rise in the country’s coronavirus cases dampened investor sentiment and raised concerns over economic recovery.

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The Nifty Bank index declined over 4 percent, while the benchmark Nifty was trading more than 2.5 percent lower.

Private lenders such as HDFC Bank, IndusInd Bank, Axis Bank, ICIC Bank, RBL Bank, among others plunged between 4-8 percent, while PSU banks including SBI, IOB, Bank of Baroda, PNB and Canara Bank declined between 6-8 percent.

India reported 1,68,912 new COVID-19 infections in the past 24 hours with the active cases breaching the 12-lakh mark. India’s COVID-19 death toll reached 1.70 lakh on April 12 with 904 more deaths being added in the last 24 hours.

The sustained rise in cases has caused fears of lockdowns in various states as many of them have already imposed stricter restrictions on movement of people.

Banks are extremely vulnerable to any economic fallout resulting from the lockdown.

“The financial sector is taking the COVID-19 impact on its chin. Sentimentally and fundamentally things look a bit difficult for financials. This could continue till the numbers start plateauing, till you start seeing a little bit of flattening of the curve and the vaccination drive starts taking attention away from the cases that are rising,” market expert Prakash Diwan told CNBC-TV18.

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