Indian shares ended lower on Thursday, dragged by financials as investors remained cautious ahead of the second-quarter earnings season.

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Meanwhile, sentiment remained weak after Moody’s Investors Service cut its growth forecast for India for the fiscal year that began in April to 5.8 percent from 6.2 percent and said a weaker growth outlook will dampen the prospects for fiscal consolidation.

The Sensex ended 297 points lower at 37,880, while the broader Nifty50 index lost 79 points to end the day at 11,234. In broader markets, the Nifty Midcap fell 1.1 percent and the Nifty Smallcap index shed 0.5 percent.

Bharti Airtel, Grasim, Reliance Industries, HUL and HCL Tech were the top gainers on the Nifty50 index, while IndusInd Bank, Yes Bank, GAIL, Tata Motors and Vedanta led the losses.

All sectoral indices ended in red for the day. Banking and financial indices fell the most with the Nifty Bank, the Nifty PSU Bank and the Nifty Private Bank down around 3 percent each. The Nifty Fin Services index also lost 1.9 percent for the day. Meanwhile, the Nifty Realty was down 2 percent and the Nifty Metal slipped 1.5 percent.

Indiabulls Housing and Lakshmi Vilas Bank were under pressure on Thursday after the Reserve Bank of India (RBI) rejected their proposed merger. Indiabulls Housing lost nearly 20 percent to its 52-week low of Rs 187.50 per share on the BSE, while Lakshmi Vilas Bank hit its 5 percent lower circuit at Rs 25.65.

Dewan Housing Finance Corporation hit a 10 percent lower circuit on reports that Edelweiss Asset Management has approached the Bombay High Court to recover its dues of around Rs 70 crore after Reliance Nippon Life Asset Management had approached the courts against the stressed home financier.

Meanwhile, telecom stocks rose after Reliance Jio said it would start charging customers for calls made through its network to other operators. Bharti Airtel rose 4.3 percent, while Vodafone Idea gained 5 percent.