India's benchmark indices tumbled over 1% in early trade on Thursday after the country's securities market regulator induced measures to tame the booming derivatives volumes.
Meanwhile, risk-off sentiments saw a comeback in the domestic stocks as tensions in West Asia flared up, along with foreign investors making a strategic shift in allocation to China in hopes of economic recovery.
Nifty fell as much as 1.34% to 25,451 while Sensex tanked by 1.5% to 83,002.
At 10:56 a.m., the NSE Nifty 50 was trading 282 points, or 1.09% lower at 25,514, and the S&P BSE Sensex was down 917 points, or 1.09% at 83,348.
Also Read: Stock Market Today: Nifty, Sensex Clock Worst Fall In Nearly Two Months As RIL, HDFC Bank Weigh
SEBI's F&O Action
India's securities market regulator introduced a range of new measures under its futures and options framework to strengthen the equity index derivatives market. The new regulations range from limiting one benchmark index per exchange for weekly expiry derivatives contracts to mandatory upfront collection of option premiums from buyers.
Trading volumes in India's futures and options segment could be halved after SEBI's new norms take effect, sources told NDTV Profit.
Around 50–60% of traders are expected to exit the segment due to higher contract sizes. The average trade size in futures and options could increase to Rs 20,000 from Rs 5,550 in fiscal 2025.
The market regulator's announcement came after the SEBI board meeting on Monday, where it was expected to approve the recommendations of the expert working committee and secondary market advisory committee aimed at tightening regulations for retail individual derivative traders.
Iran-Israel Conflict Flare-Up
Tension in West Asia flared up after Iran launched approximately 200 ballistic missiles towards Israel on Tuesday evening. The attack came shortly after the United States had issued a warning of an imminent threat.
Israeli Prime Minister Benjamin Netanyahu pledged a retaliatory response. The Israel Defense Forces said many of the missiles had been intercepted, and reports indicated one person had been killed in the West Bank.
Iran’s attack followed Israel’s killing of Hassan Nasrallah, the longtime leader of the Tehran-backed Lebanese militant group Hezbollah, on Sept. 27.
China Revival Hopes Woo Foreign Flows
The recovery in Chinese markets has prompted foreign inflows to take a temporary shift away from India.
The turnarounds in China took shape as traders expected the stimulus to boost the economy. The benchmark index—CSI 300—rose for a ninth straight day with an 8.5% jump on Monday.
China's CSI 300 is up 22% from its September lows to enter a technical bull market, according to Bloomberg. After a record-breaking rally last week, China regained the influence it lost for over 10 months in the MSCI Emerging Market index.
Foreign investors have offloaded over Rs 16,500 crore from domestic stocks in the last three sessions.
GST Collections At 40-Month Low
Gross Goods and Services Tax collection growth in September reached a 40-month low of 6.5%, trigging a negative outlook on the country's growth trajectory.
The collection resulted in revenues of Rs 1.73 lakh crore, while the net collection, after adjusting refunds, grew merely 3.9%, slowest so far in the current fiscal year.
The September mop-up is about 1% less than the levels in the preceding month, while on a net basis, it's 1.5% higher than August receipts of Rs 1.53 lakh crore, according to the government's provisional data released on Tuesday.
September Auto Sales Fail To Enthuse
India's top automakers reported below-par sales numbers for September, leading to a crash in the auto stocks.
Tata Motors Ltd. registered sales of 69,694 units in September, a decline of 15% compared to the year-ago period.
Maruti Suzuki’s car sales declined nearly 4% year-on-year in September 2024 as India’s largest carmaker balanced production against inventory ahead of the crucial festive season.
Hyundai Motor India Pvt. Ltd. has recorded a 5.8% decline in domestic sales and 24.7% fall in exports for the month under review. The Korean auto major is planning to launch what can potentially be the country's largest initial public offering with the target of a pre-Diwali listing.
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