Indian shares rose on Thursday tracking global markets, but Punjab National Bank fell for a second consecutive session after saying it unearthed $1.77 billion in fraudulent transactions, dragging down other state-run lenders. The benchmark BSE index closed up 0.41 percent at 34,297.47.
The broader NSE index ended 0.42 percent higher at 10,545.50, its highest close in a week. Punjab National Bank shares ended 12.9 percent lower, hitting their lowest close since October 23, after falling as much as 14.2 percent on Wednesday.
Although some lenders broadly recovered from losses, analysts warned that other banks could have also been impacted by PNB transactions and this could continue to weigh on the market. Given the scale of the fraud, the fallout from this case could spread and give rise to fresh questions about lending procedures at Indian lenders, particularly public sector banks, mired in soured debt.
The Nifty Bank index was trading 0.4 percent higher. The Nifty PSU bank index dropped 0.5 percent, after falling nearly five percent in the previous session, following the central bank's announcement of tough rules for loan restructuring.
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