11/08/2015 3:50 PM IST | Updated 15/07/2016 8:25 AM IST

State Bank's Higher Bad Debt Ratio, Worries About GST Bill's Fate Drag Down Indian Stocks

Bloomberg via Getty Images
Employees are reflected in a glass panel as they use desktop computers while monitoring data at a securities brokerage in Mumbai, India, on Tuesday, Aug. 4, 2015. Indian central bank Governor Raghuram Rajan kept interest rates unchanged, rebuffing pressure from the Finance Ministry to reduce borrowing costs that are among the highest in Asia. Photographer: Dhiraj Singh/Bloomberg via Getty Images

Indian stocks fell about 1 percent Tuesday, the most in two weeks, after State Bank of India reported a larger ratio of bad debts, and apprehension rose that the Good and Services Tax bill will not be passed in the current session of parliament.

SBI's shares slumped and stoked selling in other state-run banks as well after its April-June net interest income and fresh slippages disappointed investors. SBI, India's largest lender, said gross non-performing assets (NPA) had climbed to 4.29 percent in the June quarter, compared with 4.25 percent in March.

Investors also turned jittery over the logjam in parliament about the key goods and service tax (GST) bill and global volatility after China unexpectedly devalued its currency.

“The market’s course in the near term will be charted by key earnings and whether the GST bill is cleared,” said R.K. Gupta, managing director of Taurus Asset Management Co., which has $650 million in assets.

READ: 7 Things You Need To Know About GST Bill

READ: Lok Sabha Passes GST, Bigger Test Awaits Govt In Rajya Sabha

With only two days for parliament's monsoon session to end, investors worry that a key reform on goods and services tax might get delayed amid continued protests by the opposition.

"The disruption in parliament and the Chinese currency devaluation has created nervousness," said G Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm. Chokkalingam said he did not expect the GST bill to be passed in the current session of parliament.

The BSE Sensex was down 0.68 percent, while the Nifty was down 0.72 percent. Both indexes are on track to post their biggest single-day percentage loss since July 27.

Banks lead the declines. The Bank Nifty was down 0.98 percent. State Bank of India fell 3.4 percent, Punjab National Bank lost 3.1 percent, while Bank of Baroda was down 3 percent. Among private banks, ICICI Bank declined 1.7 percent, while HDFC Bank lost 0.3 percent.

Losses were seen across sectors with the exception of IT stocks, which held out on account of a weak rupee. Tata Steel and Sun Pharmaceutical Industries Ltd., were down before the release of their quarterly results later on Tuesday.

(With Reuters inputs)

Contact HuffPost India