Indian equity benchmark indices extended losses in the afternoon trade on Monday amid massive selling in banking and financials stocks post disappointing June-quarter earnings.

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At 12:05 PM, the Sensex was trading 355.39 points lower at 37,981.62 while the Nifty was at 11,323.45, down 95.80 points. In the broader market, the Nifty Midcap 100 index slumped 1.06 percent while the Nifty Smallcap 100 index declined 0.88 percent.

Yes Bank, Vedanta, Zee Entertainment, Sun Pharma and Hindalco were the top gainers in the afternoon session while Bajaj Finserv, HDFC, Bajaj Finance, HDFC Bank and Kotak Mahindra Bank remained the top laggards on Monday.

Nifty Financial Services sector witnessed heavy selling followed by Nifty Bank and Nifty Realty.

Shares of HDFC Bank declined 4 percent after the bank reported higher net performing assets (NPAs) in the Q1 earnings. Its provisions for bad loans increased significantly to Rs 2,613.7 crore in the June quarter, higher by 38.3 percent as compared to the previous quarter.

YES Bank's shares advanced over 7 percent amid reports that cash-starved DHFL is likely to announce a deal with investor Aion Capital for a majority stake in the housing finance company.

Meanwhile, Asian shares also fell as investors scaled back expectations of an aggressive interest rate cut by the Federal Reserve, while heightened Middle East tensions following Iran's seizure of a British tanker lifted crude oil prices.

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