BENGALURU, Oct 1 (Reuters) - Indian shares wobbled on Tuesday as investors parsed through a string of negative headlines in the key banking and real estate sectors, and a government proposal to privatise some state-run firms.
Markets opened higher but were soon in the red, only to turn higher again. The broader NSE index was up 0.07% at 11,483.30 by 0513 GMT, while the benchmark BSE index was 0.06% higher at 38,689.04.
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 Ltd were hurting market sentiment.
Indian officials on Monday filed a police complaint against PMC’s senior management for hiding soured loans, in a case that has sparked renewed concerns about the health of the troubled banking sector, which is facing a mountain of bad debt.
A conference call by Indiabulls management on Monday evening did little to reassure investors, with shares shedding 7% on Tuesday after a 34% plunge in the previous session.
“It’s very disturbing for the market that PMC has collapsed,” said Saurabh Jain, assistant vice president at SMC Global Securities Ltd in New Delhi.
“If there are problems in the financial sector, how can consumption be restored to normal?”
Growth in Asia’s third-largest economy has slowed, with demand for everything from cars to cookies taking a hit, prompting the government to step in with a raft of measures to boost growth, including a widely cheered move last month to slash corporate taxes.
“The optimism that came after the corporate tax cut announcement may now crack to some extent,” Jain said.
The Nifty real estate index and the Nifty private banks index fell 1.28% and 0.45%, respectively.
IndusInd Bank shed 4.9% over concerns about its exposure to Indiabulls Housing Finance, although the bank reportedly said on Monday any exposure was fully secured.
Meanwhile, Bharat Petroleum Corporation Ltd gained 5.4% after a government panel of secretaries on Monday proposed to privatise the oil refiner, according to two people familiar with the matter. (Reporting by Sachin Ravikumar; Editing by Subhranshu Sahu)