Sensex drops most in 3 weeks, led by L&T

S&P BSE Sensex closed 0.5% lower, its steepest decline in nearly three weeks

Shares dropped as industrial-equipment makers declined ahead of a factory output data that some investors gauged would fall short of estimates. 

Lenders also fell on concerns that farm-credit waivers by states would add to bad loans in the banking system. 

The benchmark S&P BSE Sensex closed 0.5 per cent lower, its steepest decline in nearly three weeks. The NSE Nifty 50 Index also fell 0.5 per cent. Larsen & Toubro, the nation’s biggest engineering company, retreated 2.3 per cent to be the worst Sensex performer, along with Tata Motors.

Ten of the 13 sector gauges compiled by BSE Ltd. retreated, led by the S&P BSE Capital Goods Index’s 1.6 percent drop. The S&P BSE Information Technology Index rebounded from a fall of more than 1 percent to close 0.4 percent higher, the best performer.

A gauge of lenders also fell 1 percent after the Maharashtra government announced that it will waive farm credits, adding to investor concerns of a further increase in bad loans at banks, already the highest among major economies globally. Uttar Pradesh, the nation’s most populous state, made a similar announcement in April.