Indian Markets Reel Under Selling Pressure Amid SEBI Regulation and Geopolitical Tensions

The Indian stock markets faced significant selling pressure due to new SEBI regulations on F&O and rising geopolitical tensions. The Nifty Sensex and BSE Sensex saw sharp declines. Experts link these issues to broader global market trends, including foreign investors pulling out funds to invest elsewhere.

The Indian stock markets encountered heavy selling pressure on Thursday following new SEBI regulations on futures and options trading, compounded by rising geopolitical tensions. In early trading, the Nifty 50 index plummeted by 1.33%, equivalent to a 344-point drop, settling at 25,452.85. Similarly, the BSE Sensex declined by 1,264.20 points, or 1.50%, opening at 83,002.09 points.

Experts have pointed to a global market shift as a catalyst for this downturn, citing reactions to recent U.S. Fed rate cuts, escalating geopolitical tensions, and capital redirection by foreign investors from India to markets like China. Ajay Bagga, a banking and market expert, suggested that while China currently benefits from increased investment, Japan is benefitting from greater stability, and Indian markets are navigating regulatory changes amid intensified geopolitical concerns involving Israel and Iran.

Bagga noted significant Foreign Institutional Investors (FII) net outflows from India and emphasized the need for substantial policy measures to make Indian markets more appealing. Although the upcoming RBI Monetary Policy Committee meeting is expected to maintain a conservative stance, a shift towards a more dovish policy outlook might emerge. Despite the primary market activity remaining robust, the Nifty Next 50 index experienced the greatest drop, down by 1.27% as of the latest reports.

Sectoral indices showed broad declines, led by a more than 2% drop in Nifty Auto, while Nifty FMCG and Nifty Realty each fell over 1.5%. In contrast, Nifty Metal slightly rose by 0.43%. On the Asian front, markets remained mixed, with Japan's indices jumping over 2% and Hong Kong's Hang Seng dipping more than 4%.

The U.S. markets slightly edged up on Wednesday, with the S&P 500 and Nasdaq closing with marginal gains.

(With inputs from agencies.)