Indian shares fell over 1.5 percent in the afternoon session dragged mainly by heavy selloffs in shares of banking and financial services companies. Analysts said recent issues involving Punjab and Maharashtra Co-operative (PMC) Bank and Indiabulls Housing Finance have created panic among investors.

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At 2.15 PM, the BSE Sensex dived 649.69 points, or 1.67 percent, to 38,020.64. The Nifty 50 plunged 189.60 points, or 1.65 percent, to 11,284.85. The Nifty midcap and smallcap indices fell over 3 percent.

Intraday, the Sensex plunged as much as 993.89 points from day's high to 37,929.89 and the Nifty 50 slumped 226.55 points to a low of 11,247.90.

"What has happened in last one week since the PMC bank issue came up and the big fall which took place in Indiabulls last fortnight has created even more uncertainty," said Amit Dalal, ED, Tata Investment Corp.

"One has to take into cognisance the fact that it is not like the banking system is in deep trouble, we are just going to have maybe some issues like one of the HFCs spoke today that they need to go in for restructuring of the company but I don’t think people should look at this as a free ride for all bears for all times to come," he added.

Among the sectoral indices, media fell over 8 percent followed by PSU Bank, which was down over 7 percent. Bank Nifty slumped over 3 percent, while realty was down over 6 percent.

Yes Bank fell 27 percent, RBL Bank declined 16 percent, IndusInd Bank and Federal Bank were down over 8 percent. SBI and PNB also declined over 6 percent.

Zee Entertainment, Bharti Airtel, ONGC and Tata Steel were among the other major losers on the key indices.

Asian Paints, Mahindra and Mahindra, BPCL and Hindustan Unilever were among the top gainers.

The Indian rupee also plunged to 71.110 per US dollar, down 34 paise from its previous close of 70.8688.

First Published:Oct 1, 2019 2:35 PM IST