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Key indices witnessed heavy selling pressure and were trading near day's low in morning trade. The Nifty was trading below 11700 mark. At 10:17 IST, the barometer index, the S&P BSE Sensex, was down 429.37 points or 1.09% at 39,084.26. The Nifty 50 index was down 133.60 points or 1.13% at 11,677.55.

Selling was broad based. The S&P BSE Mid-Cap index was down 1.14%. The S&P BSE Small-Cap index was down 1.5%.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 433 shares rose and 1421 shares fell. A total of 84 shares were unchanged.

Private sector bank stocks were trading lower. Kotak Mahindra Bank (down 1.79%), AU Small Finance Bank (down 1.55%), HDFC Bank (down 1.43%), ICICI Bank (down 1.39%) and Axis Bank (down 1.03%), IndusInd Bank (down 0.71%) declined. Yes Bank (up 5.27%) and RBL Bank (up 1.47%) advanced.

PSU banks declined. Bank of India (down 4.79%), Union Bank of India (up 4.58%), Syndicate Bank (down 3.07%), Oriental Bank of Commerce (down 2.56%), Allahabad Bank (down 2.48%), Bank of Baroda (down 2.42%) and State Bank of India (down 2.27%) declined

Punjab National Bank was down 5.57% to Rs 77.20 after the bank reported a borrowal fraud of Rs 3805.15 crore in non-performing asset account of Bhushan Power & Steel. The bank reported that the borrowal fraud includes domestic exposure of Rs 3191.51 crore at the large corporate branch at Chandigarh and overseas exposures of approx. Rs 345.74 crore at Dubai branch and approx. Rs 267.90 crore at Hong Kong.

The bank said that the fraud has been reported to the RBI on the basis of Forensic Audit Investigation findings and Central Bureau of Investigation (CBI) filing first information report (FIR), on suo moto basis, against the company and its directors, alleging diversion of funds from banking system. In the accounts of Bhushan Power & Steel (BPSL), the bank has already made provisions amounting to Rs 1932.47 crore, as per prescribed prudential norms.

The S&P BSE Bankex was down 483.88 points or 1.37% at 34,856.63.

Edelweiss Financial Services was down 1.7% to Rs 167.3 after CARE Ratings downgraded ratings on company's NCD worth Rs 284 crore to 'CARE AA-' from 'CARE AA'. CARE Ratings also changed the outlook from 'positive' to 'stable'.

MindTree was down 4.17% to Rs 828. The company announced that Krishnakumar Natarajan, executive chairman, N S Parthasarathy, executive vice chairman and chief operating officer and Rostow Ravanan, CEO and managing director have submitted their resignations as members of the board of directors of MindTree and as employees of the company. The company further stated that they will stay on board till 17 July 2019.

Indian Hume Pipe was down 4.82% to Rs 303. The company announced that Government of Andhra Pradesh terminated two contracts worth Rs 710.7 crore related to construction of drinking water supply. The company stated that it is exploring the option of legal remedies.

Overseas, Asian stocks were trading lower on Monday after a strong jobs report moderated expectations that the US Federal Reserve could soon be making a move on interest rates.

China's foreign exchange reserves expanded slightly to $3.1192 trillion at the end of June, official data showed Monday. The amount increased by $18.2 billion, or 0.6$ from the end of May, according to the State Administration of Foreign Exchange (SAFE).

US stocks closed slightly lower Friday, 5 July 2019, following an unexpectedly strong US payrolls report, reducing the chances of multiple Federal Reserve rate cuts by the end of the year.

On the data front, the US economy added a better-than-expected 224,000 jobs in June, while the unemployment rate ticked up slightly to 3.7% from 3.6%.

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