State-run banks weigh on India's blue-chip Nifty 50 index

The Bombay Stock Exchange building is seen in Mumbai

By Hritam Mukherjee

BENGALURU (Reuters) -India's blue-chip Nifty 50 closed lower on Monday, weighed down by a slide in state-run banks on fears that newly proposed rules would likely weigh on their profits.

The Nifty 50 closed 0.15% lower at 22442.70 points.

However, the 30-member S&P BSE Sensex edged 0.02% higher to 73,895.54 as the drop in state-run banks was offset by gains in IT stocks and Kotak Mahindra Bank.

The Nifty PSU index, which houses state-owned banks, slid 3.66% after the Reserve Bank of India's draft guidelines on project finance proposed lenders set aside more money for loans to under-construction infrastructure projects.

Analysts said the norms, if implemented, would hurt lenders' margins. Punjab National Bank led losses with a 6.41% drop.

"The RBI's guidelines led to the drop today, but it will have a minimal impact on markets overall, since the weightage of PSU banks is not very high on the index," said Sunny Agrawal, head of fundamental equity research at SBICaps Securities.

The heavyweight financial services index closed 0.25% lower, led by a near 9% slide in state-run non-bank lender Power Finance Corps (PFC).

Helping the financials index was private lender Kotak Mahindra Bank's 5% jump after its fourth-quarter profit beat estimates.

The U.S. rate-sensitive IT stocks gained 0.94% after cooler-than-expected U.S. job growth data bumped investor expectations to two U.S. rate cuts this year, from just one cut before the data.

Britannia surged 6.7%, the most on the Nifty 50, after its fourth-quarter margin growth impressed analysts.

Meanwhile, Titan slid 7.18%, the most on the Nifty 50, after the jeweller's quarterly profit missed estimates due to bigger discounts amid higher gold prices.

The Adani group's seven-listed firms lost between 0.3% and 4% on the day, continuing their drop from last week after the markets regulator issued them notices of regulatory violations.

The more domestically-focussed small- and mid-caps shed 1.5% and 0.54% at the close.

(Reporting by Hritam Mukherjee and Bharath Rajeswaran in Bengaluru; Editing by Sherry Jacob-Phillips and Savio D'Souza)