Indian shares plunged on Monday as signs of damage to the economy from the novel coronavirus outbreak continued to mount, with beaten-down banking stocks leading the decline after the government suspended new bankruptcy filings.
The government's economic relief measures, the last of which were announced on Sunday, have been criticised for being inadequate to drive consumption or manufacturing, which are expected to provide a quicker boost to a slowing economy.
"The government keeping the handbrake on spending ... guarantees that many firms and households will emerge from the crisis with impaired finances that will hold back the recovery," said Shilan Shah, senior India economist at Capital Economics in Singapore.
Late on Sunday, Goldman Sachs projected India's economy to shrink 45% on an annualised basis in the April-June quarter, and sharply lowered its forecast for a decline in annual gross domestic product to a 5% fall.
India's economic package was focused more on the medium term, and was unlikely to have an immediate impact on reviving growth, Goldman analysts said.
The government's announcement on Sunday that India would stop fresh insolvency cases for a year -- aimed at avoiding a wave of bankruptcies from companies impacted by the coronavirus outbreak -- hit banking stocks on Monday.
The Nifty banking index recorded its worst fall in two weeks, dropping 6.7%, as the sector is expected to suffer a fresh bout of bad loans and would be unable to take defaulting companies to bankruptcy court. Five banking stocks were the biggest drags on the blue-chip NSE Nifty 50.
The Nifty 50 ended 3.43% lower at 8,823.25, slipping below the 9,000 level for the first time in nearly four weeks. The 30-strong S&P BSE Sensex closed down 3.44% at 30,028.98.
In a bright spot, shares in drugmaker Cipla Ltd gained 5.3% after financial results for the March quarter and a new drug filing for the generic version of GSK's blockbuster lung drug Advair.
In another sign of the economic damage from the COVID-19 pandemic, food-delivery firm Swiggy, one of India's best known startups, announced layoffs of 1,100 employees.
Coronavirus infections in the country continued to rise unabated, and surged past 96,000 on Monday, as India extended a lockdown to May 31, while relaxing some curbs.
Meanwhile, European stock markets rose and oil prices climbed to their highest in more than a month as a loosening of coronavirus shutdowns boosted market sentiment.