Shares in Banks saw relentless selling pressure dragging the Sensex down almost 550 points in trade. Public sector banks were the worst affected after downgrade by a foreign brokerage firm.

Bank of Baroda, Canara Bank, Syndicate Bank, Union Bank of India and Punjab National Bank were all down more than 5 per cent each.

Stocks like State Bank of India, Bank of India and ICICI Bank hit a new 52-week low. In fact, the drop in banking stocks is one of the main reasons for the sharp fall in the indices in the last few months.

The Sensex has fallen from a high of 30,000 points in march to the current level of 25,200 points. Banking stocks which have a heavy weight in the index have dropped sharply anywhere between 25-30 per cent.

There maybe some more downside in the markets if the US Federal Reserve hikes interest rates in the US. Also, economic growth has been sluggish compounding worries on the non performing assets front.

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