Markets fall nearly 1 percent; SBI drags post results

MUMBAI (Reuters) - India's stock markets fell about 1 percent on Tuesday, heading towards their biggest single-day loss in over two weeks, led by declines in lenders after State Bank of India's quarterly results disappointed investors.

State Bank of India'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.

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.

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," G Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm said.

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.

(Reporting by Karen Rebelo and Abhishek Vishnoi; Editing by Anand Basu)