India's equity benchmark indices, Sensex and Nifty, dropped nearly 1.5% on Monday, driven by heavy selling in banking, finance, and auto stocks amid escalating geopolitical risks in the Middle East and weakness in Japanese markets.
Additionally, profit-taking in key stocks such as Reliance Industries, following a record-breaking rally, and foreign fund outflows contributed to the market downturn, analysts said.
The BSE Sensex fell by 1,272.07 points, or 1.49%, closing at 84,299.78. Earlier in the day, the index had dropped as much as 1,314.71 points, hitting 84,257.14. Out of the total shares traded, 2,223 stocks declined, 1,819 advanced, and 151 remained unchanged on the BSE.
Meanwhile, the NSE Nifty tumbled 368.10 points, or 1.41%, to close at 25,810.85.
“Nifty-50 had its worst day in nearly two months, driven by weak Asian markets, led by Japan, rising tensions in the Middle East, and concerns over funds shifting to China after recent government measures,” said Deepak Jasani, Head of Retail Research at HDFC Securities.
Among the 30 Sensex constituents, Reliance Industries and Axis Bank dropped more than 3% each, with ICICI Bank, Nestlé, Tech Mahindra, Mahindra & Mahindra, Maruti, Bajaj Finserv, State Bank of India, and Tata Motors also seeing significant losses. On the other hand, JSW Steel, NTPC, Tata Steel, Titan, and Asian Paints were the top gainers.
“This sharp decline was mainly due to profit booking after recent highs and heightened geopolitical tensions, which unsettled investor sentiment. Reliance Industries, in particular, saw a 3% drop, significantly weighing down the index,” said Vikram Kasat, Head of Advisory at PL Capital - Prabhudas Lilladher.
Sector-wise, the BSE auto index tumbled 1.91%, bankex fell 1.82%, and realty and financial services were down 1.80% and 1.40%, respectively. In contrast, metals and commodities were among the few sectors that gained.
“Global markets were shaken by the threat of rising geopolitical risks in the Middle East and a potential increase in Japan’s interest rates, which could impact cross-border equity investments. Meanwhile, China saw a resurgence, fuelled by a large stimulus package and cheap valuations. Indian markets, however, weakened due to global pressures and premium valuations, although metals are expected to perform well in the near term,” said Vinod Nair, Head of Research at Geojit Financial Services.
Asian markets were mixed, with Japan’s Nikkei 225 plunging nearly 5% following the ruling Liberal Democrats’ decision to replace Prime Minister Fumio Kishida with former Defence Minister Shigeru Ishiba, who has previously supported raising interest rates and hinted at corporate tax increases. Meanwhile, markets in Seoul also faced sharp losses.
In contrast, Shanghai and Hong Kong closed sharply higher after the Chinese government announced new stimulus measures to support its struggling economy, particularly in the property and financial sectors. European markets were trading lower, and US markets closed mixed on Friday.
Foreign institutional investors sold equities worth Rs 1,209.10 crore on Friday, according to exchange data.
Brent crude, the global oil benchmark, declined by 0.19%, settling at USD 71.84 per barrel.
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