Indian equity benchmarks extended losses in afternoon trade on Tuesday, with the Sensex and Nifty slipping sharply from intraday highs as banking stocks came under pressure following concerns around the Reserve Bank of India’s (RBI) new provisioning framework, while elevated crude oil prices weighed on sentiment.

As of 2:18 pm, the Sensex was down 464.38 points (-0.60%) at 76,839.26, while the Nifty 50 declined 108.15 points (-0.45%) to 23,984.55. The sell-off intensified through the session, with the Sensex now nearly 650 points below its day’s high and the Nifty over 200 points lower, indicating sustained intraday selling.

Banks drag on RBI ECL framework concerns

Banking stocks emerged as the biggest laggards after the RBI finalised its Expected Credit Loss (ECL) provisioning framework, which will come into effect from April 1, 2027.

The new regime requires banks to shift from the current incurred-loss model to a forward-looking approach, under which lenders must set aside provisions based on expected stress in loan books rather than waiting for defaults to occur.

While the 90-day NPA recognition norm remains unchanged, the move is expected to increase upfront provisioning requirements, potentially impacting profitability and capital buffers. The Nifty PSU Bank index fell over 2%, leading sectoral losses, amid concerns that public sector lenders may face higher provisioning pressure.

Oil surge weighs; aviation stocks hit

Crude oil prices remained elevated near $109–110 per barrel, driven by geopolitical tensions and supply concerns, adding another layer of pressure on the markets.

Aviation stocks came under selling pressure as rising aviation turbine fuel (ATF) costs threaten margins. Shares of InterGlobe Aviation (IndiGo) and other airline operators declined, reflecting sensitivity to crude price movements.

The Federation of Indian Airlines, representing major carriers such as Air India, IndiGo and SpiceJet, has written to the Civil Aviation Ministry flagging the severity of the crisis. The letter urged government to provide "urgent support" to ATF operations to continue airline operations.

Higher oil prices also raise concerns around inflation, the current account deficit, and the rupee, keeping broader market sentiment cautious.

Energy, metals offer limited support

Oil & gas stocks traded higher, tracking firm crude prices, while metal stocks saw mild gains. However, these pockets of strength were insufficient to offset weakness in financials and aviation.

The broader market remained mixed, with midcaps showing relative resilience even as FMCG, IT, and auto indices traded with a negative bias. The divergence indicates that domestic flows remain supportive despite global headwinds.