* NSE index falls 0.75%, BSE index down 0.79%
* Nifty banking index slides 2.5%
* ICICI Bank sheds 4.5%
By Derek Francis
BENGALURU, July 27 (Reuters) - Indian shares inched lower on Monday as heavyweight banking stocks fell after a central bank report forecast that bad loans could soar due to a rise in pandemic-led debt burdens, with a record jump in daily virus cases also denting sentiment.
The NSE Nifty 50 index fell 0.75% to 11,109.85 by 0424 GMT and the benchmark S&P BSE Sensex 0.79% to 37,833.9.
Banking stocks dropped after a report released by the Reserve Bank of India (RBI) on Friday evening said bad loans could rise to as much as 15% of the total loans by March 2021.
The report further said the COVID-19 pandemic could increase financial vulnerabilities, including corporate and household debt burdens in the case of a severe economic contraction.
“Because of the pandemic, loan growth has slowed and the moratorium has hit repayments. This is a double whammy for banks,” said Anita Gandhi, a director at Arihant Capital Markets in Mumbai.
“The RBI’s report cannot be ignored since the number is very high.”
The Nifty banking index fell 2.5%, with HDFC Bank shedding 3.3% and Axis Bank dropping 2.8%.
ICICI Bank fell 4.5% after the lender reported a profit that missed estimates for the quarter to June as its provisions for bad loans rose sharply.
Total cases of COVID-19 in India saw a record jump of nearly 50,000 infections over the last 24 hours and touched 1.44 million by Monday morning, according to government data https://www.mohfw.gov.in.
Prime Minister Narendra Modi on Sunday had said the country needed to be extra vigilant” as the threat from the virus persisted.
Among gainers, the Nifty IT index rose 0.7% and was one of the few sectors to trade in the green. Tata Consultancy Services rose about 1%.
Bharat Petroleum Corp was the top gainer on the Nifty, rising 2.3%, followed by Asian Paints, which rose 1.9%. (Reporting by Derek Francis in Bengaluru; editing by Uttaresh.V)