BENGALURU - Indian shares fell more than 1% to a three-month low on Friday, as banks continued to lead the market lower along with Adani Group companies in the wake of a short-seller attack on the conglomerate.

The Nifty 50 index was down 1.09% at 17,697 as of 11:25 a.m. IST, while the S&P BSE Sensex fell 1.16% to 59,504.92.

The indexes have slid more than 1.7% each in the truncated week, with most of it caused by U.S. short-seller Hindenburg Research's report on Wednesday that flagged concerns about the Adani Group's debt levels and use of tax havens.

Stocks of the seven listed Adani companies tumbled between 2% and 17% on the day, adding to their 1.5%-9% drop on Wednesday after Hindenburg also said it held short positions in the group.

"The particular situation is alarming and proves that derivatives are indeed weapons of mass destruction in financial markets," said Deven Choksey.

He said the hammering of Adani Group stocks has upset investor sentiment and created a crisis of confidence.

Adani Ports and Adani Enterprises were the top losers on the Nifty 50 on Friday, ahead of the latter's $2.45 billion follow-on public offering (FPO).

The heavyweight financials sector again led the slide, falling more than 2% even though brokerages said banks' exposure to the Adani Group was within manageable limits.

The drop in Indian stocks was in contrast to their Asian peers, which hit a near nine-month-high after strong U.S. economic growth data eased recession worries.

Auto stocks were among the few bright spots domestically, rising over 2%.

Index heavyweight Tata Motors surged 8% after its first quarterly profit in two years due to strong demand and as its luxury car unit, Jaguar Land Rover (JLR), turned profitable.

(Reporting by Rama Venkat and Bharath Rajeswaran in Bengaluru; Editing by Savio D'Souza)