NSE's Nifty Bank index's massive gains seen at the start of the week have been cooling off. It fell by close to 2 percent on Wednesday to touch an intraday low of 29,617.15. It is the second consecutive day of losses for the index.

The drop was lead by the State Bank of India and Axis Bank.

Shares of SBI were trading over 4.61 percent lower at Rs 288.65 after a Morgan Stanley downgraded the stock to 'Equal-weight' from 'Overweight' in its research report.

The two major benchmark indices of the Indian markets also fell in Wednesday morning trade. BSE's Sensex was down by 400 points to 38,652.15 while NSE's Nifty 50 declined by close to 1 percent to 11,463.05 points on weak Asian market sentiments and profit booking.

On Tuesday, Nifty Bank closed lower by 383 points at 30,183 levels. Losses in the previous session appear to be on account of profit booking which caused all public sector banks to turn red.

On Monday, the trading day where markets were in the euphoria of the corporate tax rate cut and some favourable GST rate reductions, Nifty Bank was a dominant performing index. It closed above 30,500 after a 5.4 percent or 1,566 points surge. Axis Bank and Kotak Mahindra Bank shares had surged by over 7 percent in value on Monday.

Tables turned on Tuesday making Nifty Bank the underperforming sector on account of profit booking. Kotak Mahindra Bank fell by 2 percent. HDFC Bank, ICICI Bank and SBI also saw losses.