Benchmark indices fell more than 3 per cent and the banking sector gauge dropped nearly 7 per cent on Monday, with investors expressing disappointment over the Rs 20-trillion stimulus package announced by the government. Strong global cues amid easing of lockdowns by many countries did little to assuage domestic investor concerns.

The Sensex closed at 30,028, down 1,069 points, or 3.4 per cent, and the Nifty fell 314 points, or 3.4 per cent, to end at 8,823. Both the indices fell to their lowest level since April 8. Nearly Rs 3.7 trillion worth of investors’ wealth was eroded in Monday’s crash.

Analysts said the stimulus measures will do little in reviving growth in the immediate term. The extension of the nationwide lockdown and rising number of Covid-19 cases also added to investors’ woes.

Andrew Holland, chief executive, Avendus Capital Alternate Strategies, said: “There is nothing to alleviate the immediate concerns of stressed companies and nothing for demand revival. Even if the lockdown is lifted tomorrow, where is the demand going to come from? People will be cautious as there is no job security.” Banking stocks took the biggest pounding over worries they might bear the biggest brunt of the economic damage.

Investors feared banks would have to do all the heavy lifting of the stimulus measures.

Analysts said the government’s decision to stop fresh insolvency cases for a year due to the coronavirus outbreak and push to increase lending would hurt banks’ profitability.

On May 20 — a day after Prime Minister Narendra Modi pledge to spend Rs 20 trillion to lift the economy — the markets had gained over 2 per cent. The optimism didn’t last long as the plans, outlined by Finance Minister Nirmala Sitharaman, disappointed investors as they entail more guarantees and supports and less actual spends.

"The government has aimed for maximum bang with minimum buck,” said a note by Nomura. Another foreign brokerage, Bernstein questioned whether the package was about reviving the GDP or reaching the Rs 20-trillion mark. “While the package started on important aspects, the need to announce measures that add up to this top down number made the entire package aimless, with several generic announcements which should ideally, have been a part of a normal economic agenda. Overall, we see it as a lost opportunity,” it said.

Overseas investor sold shares worth Rs 2,513 crore on Monday, while domestic institutional investors, too, were sellers to the tune of Rs 150 crore.

The markets were pinning hopes on tax cuts, cash doles and other measures to spur demand. "The worry now is more on how do we revive the economy in the short term. And, that has been the missing element in this package. The market would have preferred some more fiscal spending from the government," said Jyotivardhan Jaipuria, founder, Valentis Advisors.

The benchmark indices are now down 11 per cent in May, but are still 16 per cent above their coronavirus lows made on March 23. All the Sensex components, barring IT and teck indices, ended the session with losses. Banking majors HDFC Bank, ICICI Bank, and State Bank of India fell over 5 per cent each. Automobile stocks were other big losers.