Domestic stock markets gave up all of their intraday gains in a volatile session on Monday, ahead of the release of official data on the country’s GDP in the April-June period amid rising geo-political tensions between India and China. The S&P BSE Sensex index plunged as much as 1,240 points from a six month high of 40,010.17 to fall below 39,000-mark. The NSE Nifty 50 benchmark dropped below 11,450 at the weakest level of the day, having risen to as high as 11,794.25.

As of 1:21 pm, the Sensex plunged 620 points to 38,860 and Nifty dropped 1.7 per cent or 200 points to 11,446.

Earlier in the day, both indices had staged gap-up openings as investors cheered the government’s move to further ease the pandemic-related restrictions. However, the momentum was short-lived.

India is likely entering its deepest recession on record, which is expected to run through the second half of the fiscal year, as the rapid spread of the coronavirus pandemic continues to weigh on demand, hindering a pickup in business and economic activity.

In a major flare-up in Ladakh, Chinese troops “carried out provocative military movements to change the status quo” near Pangong Tso lake on Saturday night but they were blocked by Indian soldiers, the government said on Friday. The incidents took place overnight between August 29 and 30, according to a statement by the Army.

“Markets were overbought and at euphoric levels. Heightened geopolitical tensions between India and China after the Indian soldiers blocked Chinese troops near Pangong Tso lake and reports that India’s economic growth will be worst among the G20 nations are spooking the investor sentiment,” AK Prahakar, head of research at IDBI Capital, told NDTV.

Meanwhile, selling pressure was visible across sectors as the 19 sector gauges compiled by BSE were trading lower led by banking and capital goods indexes over 3 per cent drop.

Auto, pharma, information technology, consumer durables, metal, power, oil & gas and realty shares also fell between 2-4 per cent.

Mid- and small-cap shares were also facing intense selling pressure. The S&P BSE Midcap and S&P BSE Smallcap indices fell over 3 per cent.

IndusInd Bank was the top Nifty loser, down more than 4 per cent at Rs 636. Zee Entertainment, State Bank of India, JSW Steel, Bajaj Finance, Sun Pharma, Kotak Mahindra Bank, ICICI Bank, Eicher Motors, Maruti Suzuki, Bharti Airtel and Mahindra & Mahindra also fell between 1.6 per cent and 3.2 per cent each.

On the flipside, Reliance Industries rose nearly 1 per cent after the company on Saturday agreed to buy Future Group’s retail and other businesses for $3.38 billion. Shares of Future Enterprises rose about 5 per cent. ONGC, Bharti Infratel, Wipro, HDFC Bank, Adani Ports and tech Mahindra were also among the gainers.