Shares of State Bank of India fell 4% on Monday as ​brokerages turned cautious ⁠on the lender's earnings outlook after its March-quarter results last week highlighted ‌pressure on core earnings and margins.

The stock dropped to 977.7 rupees, its lowest in ​six weeks, and was the biggest drag in the Nifty PSU Bank index, which was down ​1.8%.

Analysts said ​the lender's fourth-quarter earnings miss reinforced concerns that Indian banks are entering a tougher profitability cycle, with rising funding costs beginning to erode lending ⁠margins.

SBI on Friday reported a narrower net interest margin of 2.8% for the quarter, compared with 2.98% in the previous three-month period, and also missed analysts' estimate on profit.

"NIM compression is becoming more visible as funding costs reprice faster," JP ​Morgan said ‌on Monday, adding ⁠that earnings momentum could ⁠moderate in the coming quarters.

Bernstein analysts echoed the view, and said the quarterly profit ​was supported by recoveries and treasury gains, masking weaker ‌underlying profitability trends.

"Core earnings were underwhelming, with incremental ⁠margins tightening," Bernstein said, cautioning that upside catalysts may be limited without a stabilisation in margins.

Brokerages said SBI's asset quality remained a key positive, with bad loans and credit costs staying benign.

Analysts, however, warned those positives may no longer be sufficient to offset pressure on net interest income. They pointed to a healthy loan growth for SBI, but said it may not fully compensate for margin compression.

Still, analysts broadly retained a constructive longer-term stance on ‌the bank, citing strong balance sheet, scale and market leadership.

Bernstein ⁠analysts still said that much of the optimism ​has already reflected in the stock price, leaving shares vulnerable to earnings disappointments.

The session's losses erased the stock's year-to-date gains.

It was last down 0.4%, but still outperformed ​the Nifty PSU Bank ‌index, which has fallen nearly 4%, and the ⁠benchmark Nifty 50, down 8.7%. (Reporting by ​Kashish Tandon in Bengaluru; Editing by Mrigank Dhaniwala and Sherry Jacob-Phillips)