Indian shares dropped more than 1% on Monday, weighed down by broad-based profit booking, while volatility spiked ahead of the U.S. presidential election and the likelihood of further U.S. interest rate cuts.
The NSE Nifty 50 fell 1.4% to 23,964.6 points as of 10:26 a.m. IST, while the BSE Sensex lost 1.32% to 78,679.45. They rose about 0.4% each in the special one-hour session during the holiday on Friday.
“Despite the gains on the special session on Friday, the market remains under pressure,” said Palka Arora Chopra, director at Master Capital Services.
“Investors are adopting ‘selling on any rise’ approach, with the market likely to be guided by U.S. presidential elections on Tuesday and rate decisions from several global central banks, including the Fed (Federal Reserve) later in the week.”
All the 13 major sectors logged losses.
Analysts said there could be further profit booking in the coming sessions, with volatility likely to rise further, as investors await clarity on the political front and the rate trajectory in the world’s largest economy.
Autos lead rise in Indian shares in special Diwali session
The markets expect the Fed to opt for a 25 basis point rate cut on Nov. 7. Lower interest rates in the U.S. could spur higher foreign inflows into emerging markets like India.
The Nifty volatility index rose to 17.25, its highest since early August on Monday.
Drug maker Sun Pharma fell 3% after a U.S. district court granted a preliminary injunction moved by Incyte Corp, preventing it from launching a key drug.
Two-wheeler maker Bajaj Auto fell 4.7% after posting a drop in monthly domestic sales in October.
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