Mumbai: The Sensex on Tuesday dropped by 289 points after a sharp selling of automobile and state-run bank stocks. While the shares of India Bank fell over 13 per cent, the shares of Bank of India fell by nearly 7 per cent.Also Read - Sensex Bounces Back: Rises Over 1,400 Points, Nifty Reclaims 16200 | Media, Metal, Realty Stocks Rally

Notably, the major constituents of the PSU Bank index declined and were recorded to be in the range of 2 to 6 per cent. Also Read - Closing Bell: Sensex Falls Over 1,400 Points Amid Global Sell-Off; Nifty Falls To 15,800

The acute stress in the share values was detected in not just the auto sectors, but also for the metal stocks whose sharp decline showed on the bourses, raking up growth concerns. Also Read - Sensex Closes 1,344 Points Higher, Nifty Above 16,200; LIC Closes 8 Per Cent Below Share Price

The Sensex closed at 37,397.24 with 289.13 points lower from its previous close of 37,686.37. Besides, it opened at 37,735.54 from its Monday’s close of 37,686.37. The Nifty, on the other hand, fell to 11,085.40 at 103.80 points lower.

Commenting on the drop in the Sensex, Vinod Nair, Head of Research, Geojit Financial Services, said, “Broad-based selling dragged the indices to lower level as investors remain cautious ahead of US-China trade talks, FED policy, US job data and a mixed bag of ongoing domestic corporate results.”  He added, “Liquidity constraints and sluggish outlook on auto sector indicates that consolidation may continue. Fall in 10-year bond yield in expectation of further 25bps rate cut by the RBI may ease liquidity crunch to some extent.”

Meanwhile, the shares of Indiabulls Housing Finance took a heavy hit in the past two days amid allegations of embezzlement of over Rs 1 lakh crore from the National Housing Bank (NHB). However, NHB has denied those allegations.

Earlier in the day, the shares of Coffee Day Enterprises Ltd plunged 20 per cent in early trading after the founder and largest shareholder in the company, VG Siddhartha, went missing under mysterious circumstances on Monday evening.

The shares plunged within hours of the news of the disappearance of Siddhartha, the son-in-law of former Karnataka chief minister SM Krishna. The businessman was last seen near the Ullal bridge over the Netravati river and was reported missing from Mangalore.