MUMBAI (NewsRise) -- Indian shares declined Tuesday, dragged down by losses in lenders after fraud-hit Punjab National Bank revealed more unauthorized transactions.
The BSE Sensex dropped 0.3% to 34,346.39 and the Nifty 50 Index fell 0.3% to 10,554.30. The Nifty bank index declined 1.2% as Punjab National tumbled 12.1% after it revealed additional unauthorised transactions of about $204 million related to a fraud allegedly perpetrated by diamond merchant Nirav Modi. On Feb. 14, the state-run lender had revealed fraudulent transactions of around $1.8 billion.
On Tuesday, the government formed a panel of executive directors and chief technology officers of state-owned banks to suggest measures for safeguarding against operational and technological risks, the financial services secretary said. Punjab National's fraud has primarily been blamed by experts on failure to implement sufficient operational controls.
Indian markets began Tuesday on an upbeat note after the S&P 500 Index closed at its highest level in three weeks overnight. The U.S. benchmark index's more-than-1% advance came a day before the congressional testimony of Federal Reserve Chair Jerome Powell. The new Fed chief's remarks on inflation and economy will be closely dissected amid recent concerns that a robust economy and higher inflation could prompt the central bank to raise rates more than its current projections.
"Today's decline in Indian markets was just a pullback after two days of rally," said Kishor Ostwal, managing director at Mumbai-based CNI Research. "As for Punjab National Bank, its effects will remain contained to other public-sector banks."
Ambuja Cements dropped 3.9% and ACC declined 1.8% after saying they called off their proposed merger plan "at this point of time." Instead, an arrangement was agreed upon for swap of materials and services on mutually agreed terms to maximize synergies.
Hero MotoCorp advanced 1.6% to 3,598.25 rupees. Macquarie maintained its 'outperform' rating on the stock with a target price of 4,400 rupees, saying it expects the company to be a key beneficiary of recovery in rural demand in financial year 2019.
Shares of local bourse operator BSE dropped 0.4%. Late Monday, it waived off transaction charges on stocks that were part of the BSE Sensex Index with effect from March 12.
-- Nimesh Vora and Vidyut Deshpande