BENGALURU, June 24 (Reuters) - Indian shares snapped four straight sessions of gains on Wednesday, as investors booked profits in banking stocks amid fears of a rise in loan defaults due to the COVID-19 pandemic.
The markets opened higher but reversed their course around midday as the focus turned to record levels of coronavirus infections in several U.S. states, spurring concerns about the pace of a nascent economic recovery. European shares fell 1.8%.
The Nifty bank index fell 3.8%, the top loser among 11 sectoral indexes. It has risen 11% so far this month, driven by strong March-quarter earnings and a flood of liquidity from global investors.
Investors booked profits in banking stocks due to the recent run-up and also driven by concerns about a rise in soured loans, especially as many borrowers opt for a moratorium on loan repayments, and the outlook for loan growth, said Deepak Jasani, head of retail research at HDFC Securities in Mumbai.
“The key concerns are that credit growth is not happening, and asset quality is under question across the board,” Jasani said. “These two things are bothering investors.”
The NSE Nifty 50 index closed 1.58% lower at 10,305.30, while the S&P BSE Sensex also shed 1.58% to settle at 34,868.98.
The Nifty 50 has risen 7.6% so far this month, helped partly by foreign institutional investors, who are benefiting from access to higher liquidity.
Both ICICI Bank Ltd and IndusInd Bank Ltd dropped 7.5%.
Strong quarterly margins drove shares of Asian Paints Ltd up 3.8%, making them the top gainers on the Nifty 50.
Meanwhile, cases of coronavirus infections rose to 456,183 in India, with the death toll reaching 14,476. (Reporting by Sachin Ravikumar; Editing by Subhranshu Sahu)