Indian shares settled one percent lower on Tuesday dragged mainly by heavy selloffs in shares of banking stocks as investors fretted about the exposure of major banks to the troubled real estate sector, compounding worries about a slowdown in economic growth. The market sentiment also remained cautious ahead of the RBI policy decision later this week.

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The Sensex ended 362 points lower at 38,305, while the broader Nifty50 index lost 115 points to end the day at 11,360. In broader markets, the Nifty Midcap and the Nifty Smallcap indices fell around 1.8 percent each. A last-hour recovery did help stem the fall as Nifty gained 112 points and Sensex gained 376 points from lows. The Nifty took support at 200-day moving average (DMA) of 11,250.

Intraday, the Sensex plunged as much as 737 points to 37,929.89 and the Nifty 50 slumped 226.55 points to a low of 11,247.90.

Analysts said a deepening crisis at Punjab and Maharashtra Co-operative Bank (PMC), one of the country’s top such lenders, and fraud allegations against mortgage lender Indiabulls Housing Finance were hurting market sentiment.

BPCL, HDFC Bank, M&M, IOC, and Maruti were the top gainers on the Nifty50 index, while Yes Bank, Zee, SBI, IndusInd Bank, and Grasim led the losses.

All sectoral indices ended in red for the day. Nifty Midcap and Nifty Bank underperformed amongst frontline indices. Nifty Media and Nifty Realty shed the most, down over 4 percent each, while Nifty PSU Bank tumbled 3.8 percent. Nifty Bank and Nifty Pvt Bank also cracked 1.3 percent each during the day. Nifty IT slipped 1.5 percent and Nifty Metal was down 1.7 percent for the day.

Indiabulls Housing gained in the last hour of trade to end around 11 percent higher. The stock fell 34 percent in the previous session.

However, Yes Bank shares came under pressure for the fifth straight session amid concerns over its exposure to Indiabulls Housing Finance. In intra-day deals, the stock tanked as much as 30 percent to hit its all-time low of Rs 29 per share on BSE. It ended 22 percent lower and the overall market capitalisation of the firm also fell below Rs 8,500 crore on BSE.

IndusInd Bank also slipped over 5 percent and RBL Bank fell nearly 8 percent over concerns of its exposure to troubled Indiabulls Housing Finance.

Both Yes Bank and IndusInd Bank said separately any exposure to Indiabulls was fully secured.

Bharat Petroleum Corp Ltd (BPCL) shares jumped 5 percent after a group of secretaries cleared divestment in the public sector downstream company.

First Published:Oct 1, 2019 3:49 PM IST