Indian Stock Indices Plummet Amid Geopolitical Tensions and Chinese Stimulus Effect

Indian stock markets faced a sharp decline in early Monday trade, with Sensex dropping over 1,000 points and Nifty falling by around 300 points. Key sectors like banking, auto, financial services, and realty were top losers due to geopolitical tensions, profit booking, and increased Chinese investments.

Indian stock indices faced a steep decline in early Monday trade, continuing to experience pressure throughout the session. The Sensex plunged more than 1,000 points, while the Nifty dropped approximately 300 points.

Key sectors, including banking, auto, financial services, and realty, ranked among the top losers today. Market expert Ajay Kedia attributed the downtrend to ongoing profit booking, escalating geopolitical tensions in the Middle East, and fresh Chinese stimulus attracting foreign direct investments (FDIs).

'The market is likely to enter a consolidation phase in the near term. One major factor influencing foreign portfolios is the outperformance of Chinese stocks, reflected in an approximately 18% surge in the Hang Seng index in September. This surge is driven by hopes of a Chinese economic revival following recent monetary and fiscal stimulus,' said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. He added that while foreign institutional investors (FIIs) might continue to sell in India, the significant domestic investments could absorb the sales, and investors should consider buying quality large-cap stocks.

On Friday, Indian stock indices had closed the week's trade marginally in the red after six consecutive session highs, mainly due to profit booking. Previously, an interest rate cut of 50 basis points by the US Federal Reserve had lent support to Indian stocks, as such cuts make alternative investment destinations like India more attractive.

Foreign portfolio investments in Indian stocks had remained positive for the fourth straight month, providing some support to the indices. (ANI)

(With inputs from agencies.)