Ambuja Cement Ltd slid as much as 4.8 percent and ACC Ltd fell as much as 2.2 percent after the companies said late on Monday that they were putting on hold a proposed merger.
The companies cited “some constraints to implement a merger”, although they left the door open to one, saying it “remains the ultimate goal”.
They did not disclose any additional details.
The two cement companies, owned by Swiss-based LafargeHolcim Ltd, added they had reached an agreement for the sale and purchase of materials and services with a view “to maximise synergies”.
ACC and Ambuja had announced last year they were considering a merger, without disclosing a value, to achieve operational and financial efficiencies.
“The development is sentimentally negative for both the companies, as it will have much lesser synergetic benefits than envisaged earlier,” retail brokerage Sharekhan wrote in a note.
Ambuja Cement shares clocked their biggest intraday fall since July 10, 2017.