Stocks slump amid fresh China border tensions; banks drag
Nifty falls 2.2%, bank index drops 3.1%
Indian shares closed lower on Monday, snapping a streak of six straight sessions of gains, as a fresh border flare-up between India and China outweighed initial optimism from further reopening of the economy.
The NSE Nifty 50 index closed down 2.23% at 11,387.50, while the S&P BSE Sensex ended 2.13% lower at 38,628.29.
India said it foiled an attempt by Chinese troops to encroach over the countries’ disputed and ill-defined border in the western Himalayas, in a fresh flare-up of tensions that have been running high for several months.
The news undid initial optimism over the government’s further relaxation of COVID-19 restrictions, which include reopening of underground train networks and allowing sports and religious events in a limited manner from September.
“The market was trading in an over-bought zone, so a sell-off was expected, and the news of fresh tensions at (the India-China) border has impacted sentiment,” said Rahul Sharma, market strategist and head of research at Equity99 in Mumbai.
The Indian rupee also retreated from near six-month highs on the border tensions.
In Mumbai, all major sectoral indexes ended in the red, with the Nifty bank index closing 3.14% lower, after a 13.3% rally in August. Lender State Bank of India was among the top percentage losers, falling 5.7%.
Shares in Future Group’s companies ended higher after Reliance Industries Ltd. said it would buy the group’s retail arm in a $3.38 billion deal, including debt.
Broader market slides
All BSE sectoral indices closed with losses, with BSE realty, healthcare, basic materials and utilities declining up to 4.7%, Press Trust of India reported.
In the broader market, the BSE mid-cap and small-cap indices tanked up to 4.37%.
On the BSE, 2,329 companies declined, while 536 advanced and 150 remained unchanged.
“Although markets opened with gains, it quickly succumbed to a bout of selling, following profit-booking after the recent runup,” said Vinod Nair, Head of Research at Geojit Financial Services. “The losses extended, following reports of increased tensions along the border with China. With increased geopolitical tensions, markets also traded uncertainty and this could impact the market behaviour in the coming days,” he added.
(With inputs from PTI)
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