New Delhi, Aug. 22 -- India's online gaming sector was rattled this week after the government's sweeping ban on real-money gaming wiped out billions in investor wealth. The ban, framed as a crackdown on betting and gambling, triggered panic selling in the markets, dragging down shares of listed companies in the sector.

Shares of Nazara Technologies plunged 14% in two sessions-13% on Wednesday and another 1.2% on Thursday. Delta Corp and OnMobile Global slipped 2% and 3%, respectively, in two sessions.

"The passage of the online gaming bill has created an immediate overhang for gaming stocks, and the near-term impact looks sharply negative. Since the bill effectively bans real-money gaming (RMG), which currently contributes nearly 86% to...