Shadow banking crisis claims another victim; fin stocks a drag on Sensex

Financials have seen sharp erosion in their share prices in wake of the yearlong crisis in India's credit markets

India’s unfolding shadow banking crisis has claimed another victim: the index-tracking funds investing in the nation’s stocks.

Financial stocks account for nearly half the value of benchmark S&P BSE Sensex and have been among the biggest drag on the gauge since it hit a peak in June. State Bank of India has been the biggest hindrance among stocks that have had the most negative influence, according to data compiled by Bloomberg.

“Most investors would welcome the idea of sector-specific caps,” said Gaurav Sinha, associate director for asset allocation at WisdomTree Investments in New York. “It’s a way to mitigate risks.” Wisdomtree’s $1.2