Sensex slumps 1.6%; bank stocks hit after RBI data on loan growth

Indian equity markets posted its biggest fall since May 2012 bank stocks tanked after RBI data showed loan growth was still a concern and on weakness in global shares due to worries over Fed slowing its bond buying program.

ICICI Bank closed 4 percent down while closed 2 percent lower.

Sensex closed at 19325.36, down 1.62 percent and the Nifty closed at 5852.25, down 1.53 percent.

[caption id="attachment_634505" align="alignleft" width="380"] Reuters[/caption]

A growing chorus of analysts expect India to keep net borrowing below Rs 5 lakh crore. Analysts have put faith in Finance Minister P Chidambaram's fiscal discipline, with budget projections factoring in a 4.8 percent deficit, similar to the official forecast.

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Attributing slow growth to global and domestic factors, President Pranab Mukherjee today said the government is taking several steps to boost economy and restore investor confidence.

"Both global and domestic factors have affected our growth. We need to address the impact of both. My government has responded to the situation by taking several measures to revive investment activity and investor sentiment," he said in his maiden address to the joint sitting of Parliament, which heralds the Budget session.

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Shriram Transport Finance closed 8 percent lower after US private equity firm TPG Capital planned to sell part of its stake in the company to raise about $300 million, according to a term sheet seen by Reuters.

With inputs from Reuters