Equity indices extended losses with panic selling across sectors around noon on Monday after the Union Budget for 2019-20 did not announce any measures to boost the auto sector.
At 11:50 am, the BSE S & P Sensex was down 597 points or 1.5% at 38,888 while the Nifty 50 dropped 191 points to 11,621.
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At the National Stock Exchange, all sectoral indices were in the red with Nifty PSU bank plunging more than 5.2 per cent. Nifty realty skidded 3.4%, auto by 2.4% and metal by 2.3%.
Panic selling weighed in after Punjab National Bank reported a fraud of Rs 3,800 crore by Bhushan Power and Steel, saying the company misappropriated bank funds and manipulated books of accounts to raise funds from consortium lender banks.
PNB traded 11% lower at Rs 72.75 per share while State Bank of India was down over 4% at Rs 355.15 apiece.
Finance Minister Nirmala Sitharaman presented the Union Budget last week on Friday, her first after the National Democratic Alliance led by Prime Minister Narendra Modi swung to power after a landslide victory in the general elections.
Heavy selling pressure was seen in auto stocks due to the absence of any conspicuous impetus in the Budget for the beleaguered sector. Hero Motorcorp was down 4.6 per cent, Tata Motors by 3.3% and Maruti Suzuki by 3.2%. Bajaj Finance slipped 5.6 per cent while ONGC suffered by 4.9%.
Traders said the Budget proposals did not contain any concrete proposals to ease liquidity crunch facing the financial markets. Though corporate taxes were cut to 25%, the government raised import tariffs on items such as gold and imposed additional duty on petrol and diesel which could fuel inflation.
However, Yes Bank was up 5.9%. Other which showed gains were Bharti Infratel and IT stocks like HCL Tech, Tata Consultancy Services and Tech Mahindra.
Meanwhile, Asian shares were broadly weaker after tracking Wall Street which fell from record highs last week. Investors turned their attention to the upcoming testimony from US Federal Reserve Chairman after a strong jobs report cast doubt on the pace of interest rate cuts.