* NSE index down 0.7%, BSE falls 0.8%
* HDFC Bank at over 2-month low as bad loans rise
* Yes Bank surges 8.7%
By Chris Thomas
July 22 (Reuters) - Indian shares fell to their lowest since mid-May on Monday, dragged by banking bellwether HDFC Bank Ltd after it reported a slowdown in loan growth and a hit to asset quality.
The broader NSE index was down 0.7% at 11,344.5 as of 0446 GMT, while the benchmark BSE index was 0.76% lower at 38,044.83. The bourses appeared to be heading for their third straight session of losses.
Broader Asian stocks were under pressure too as investors trimmed expectations of an aggressive U.S. interest rate cut, while oil prices climbed after tensions in the Middle East escalated and Libya reported the shut down of its largest oil field.
HDFC Bank, India’s largest lender by market capitalisation, dropped as much as 3.1% to its lowest since May 16 and was among the top drags on the indexes.
The lender’s quarterly profit rose slightly lower than expected on Saturday, while its asset quality worsened and loan growth eased, in signs that the slowdown in economic growth was hurting some of the biggest companies in the country.
“Even the bellwether isn’t immune to the economic slowdown,” Macquarie Research said in a note.
Housing Development Finance Corporation Ltd, HDFC Bank’s biggest shareholder, dropped 4.1% in its sharpest intraday fall since October and was the top percentage loser on the indexes.
Shares of HDFC Bank’s smaller rival Kotak Mahindra Bank Ltd fell as much as 2.2% ahead of quarterly results.
The Nifty Bank index dropped as much as 1.7%.
Meanwhile, Yes Bank Ltd snapped three sessions of losses to trade 8.7% higher. The stock was the top gainer on the indexes.
Conglomerate Reliance Industries Ltd rose as much as 1.6% after posting a 7% rise in quarterly profit. It saw a double-digit growth in its retail and telecoms businesses offsetting its worst oil refining margins in 18 quarters.
Miner Vedanta Ltd climbed as much as 4.7%. (Reporting by Chris Thomas in Bengaluru; editing by Gopakumar Warrier)