Local equities dropped sharply weighed by slide in index pivotals Reliance Industries, Kotak Mahindra Bank, HDFC and Infosys. The barometer index, the S&P BSE Sensex, lost 713.53 points or 2% to settle at 34,959.72. The Nifty 50 index lost 205.25 points or 1.92% to settle at 10,488.45. The Sensex dropped below the psychologically important 35,000 mark.

Domestic market followed weakness in other Asian and European shares amid rising tensions between the US and China as well as disappointing Chinese trade data for November. The exit polls on state assembly elections also made investors jittery. Investors are bracing for the state election results that will be out on Tuesday.

Among secondary barometers, the BSE Mid-Cap index fell 1.84%. The BSE Small-Cap index fell 1.84%.

The market breadth, indicating the overall health of the market, was weak. On BSE, 636 shares rose and 1884 shares fell. A total of 158 shares were unchanged.

Among the sectoral indices on BSE, the S&P BSE Realty index (down 3.15%), the S&P BSE Capital Goods index (down 2.04%), the S&P BSE Bankex (down 2.04%) underperformed the Sensex. The S&P BSE Oil & Gas index (down 0.74%), the S&P BSE Auto index (down 0.91%), the S&P BSE Metal index (down 1.1%) outperformed the Sensex.

Kotak Mahindra Bank (down 6.56%), Asian Paints (down 3.48%) and Adani Ports & Special Economic Zone (down 3.41%) were the major Sensex losers.

Coal India (up 0.76%) and Maruti Suzuki India (up 0.49%) were the Sensex gainers.

Among heavyweight stocks, Reliance Industries (down 3.95%), HDFC (down 2.21%) and Infosys (down 1.95%) dropped.

Tata Motors lost 3.45%. The Tata Motors Group global wholesales in November 2018, including Jaguar Land Rover, were at 1,04,964 units, lower by 7%, as compared to November 2017. The announcement was made during market hours today, 10 December 2018.

Realty shares declined. Housing Development and Infrastructure (HDIL) (down 5.62%), Indiabulls Real Estate (down 6.25%), Unitech (down 4.57%), D B Realty (down 7.58%), DLF (down 3.36%), Godrej Properties (down 3.23%), Sobha (down 3.95%), Phoenix Mills (down 2.78%), Prestige Estates Projects (down 0.97%), Oberoi Realty (down 4.01%), and Peninsula Land (down 3.54%) edged lower.

Indian Oil Corporation rose 3.43%. The company said that its board will meet on 13 December 2018 to consider and approve buyback of the fully paid-up equity shares of the company. The announcement was made on Saturday, 8 December 2018.

Ashoka Buildcon advanced 4.45%. Ashoka Buildcon said that the company has received Letter of Acceptance by Rail Vikas Nigam, for the project viz. 'construction of roadbed, bridges, supply of ballast, installation of track (excluding supply of rails, and track sleepers), electrical (general electrification), provision of OHE, signaling and telecommunication works in connection with third line from Sonnagar to Garhwa Road in Dhanbad division of East Central Railway,' in the States of Bihar and Jharkhand (Project) in 2 packages (Package 1 & Package 2). The announcement was made on Saturday, 8 December 2018.

Ashoka Buildcon had bid the Project in Joint Venture with Story Tech Services LLC, wherein the company is a lead member. The aggregate accepted bid value of the project is Rs 794.20 crore.

Escorts lost 3.56%. The company has executed the Business Transfer Agreement for transferring the existing RT Crane Business of the company as a going concern on a slump sale basis to the JV for an amount not exceeding Rs 35 crore. The announcement was made after market hours on Friday, 7 December 2018.

On the economic front, India's current account deficit (CAD) increased to US$ 19.1 billion (2.9% of GDP) in Q2 of 2018-19 increased from US$ 6.9 billion (1.1% of GDP) in Q2 of 2017-18 and US$ 15.9 billion (2.4% of GDP) in the preceding quarter. The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit at US$ 50.0 billion as compared with US$ 32.5 billion a year ago.

Meanwhile, the provisional figures of direct tax collections up to November, 2018 show that gross collections are at Rs. 6.75 lakh crore which is 15.7% higher than the gross collections for the corresponding period of last year. Refunds amounting to Rs.1.23 lakh crore have been issued during April, 2018 to November, 2018, which is 20.8% higher than refunds issued during the same period in the preceding year. Net collections (after adjusting for refunds) have increased by 14.7% to Rs. 5.51 lakh crore during April - November, 2018. The net direct tax collections represent 48% of the total Budget Estimates of Direct Taxes for F.Y. 2018-19 (Rs. 11.50 lakh crore).

So far as the Growth Rate for Corporate Income Tax (CIT) and Personal Income Tax (PIT) is concerned, the Growth Rate of Gross Collections for CIT is 17.7% while that for PIT (including STT) is 18.3%. After adjustment of refunds, the Net Growth in CIT collections is 18.4% and that in PIT collections is 16.0%. It is pertinent to mention that collections of the corresponding period of F.Y. 2017-18 also included extraordinary collections under the Income Declaration Scheme (IDS), 2016 amounting to Rs.10,833 crore (Third and last instalment of IDS), which do not form part of the Current Year's collections.

On the political front, market participants are awaiting poll results of five state elections due on 11 December 2018. The outcomes of the assembly elections will likely set the tone for the general elections next year. Voting in Rajasthan and Telangana took place on 7 December 2018. Assembly elections in Madhya Pradesh and Mizoram were held on 28 November 2018. The election in Chhattisgarh Assembly was held in two phases on 12 and 20 November 2018. The counting of votes in all the states will be done on 11 December 2018.

Exit polls on Friday reportedly indicated that the Bharatiya Janata Party risks losing control of Rajasthan to the Congress and faces a close fight in Madhya Pradesh and Chhattisgarh.

Overseas, European shares declined on worries over slowing economic growth and fears of a fresh flare-up in tensions between the world's two largest economies.

Asian shares ended lower Monday following weaker-than-expected Chinese trade data released over the weekend.

China's November exports only rose 5.4% from a year earlier, Chinese customs data showed on Saturday. The customs data showed that annual growth for exports to all of China's major partners slowed significantly. Exports to the United States rose 9.8% in November from a year earlier, compared with 13.2% in October. Import growth was 3%, the slowest since October 2016. Imports of iron ore fell for a second time, reflecting waning restocking demand at steel-mills as profit margins narrow.

Meanwhile, China protested the arrest of a senior executive of Chinese electronics giant Huawei, who is suspected of trying to evade US trade curbs on Iran. US and China recently agreed to hold off on imposing further tariffs for 90 days while they attempt to resolve a range of issues from trade to technology development. The arrest could jeopardize the truce that was just agreed.

US stocks closed sharply lower on Friday as a lack of concrete progress toward reducing US-China trade tensions bolstered risk-off sentiment and overshadowed the November employment report.

Nonfarm payrolls increased by 155,000 for the month while the unemployment rate again held at 3.7%, its lowest since 1969, the Labor Department reported Friday.

Meanwhile, the University of Michigan consumer sentiment index came in at 97.5. Further, consumer credit grew at its fastest pace in 11 months in October, the Federal Reserve reported.

Oil producer club OPEC and some non-affiliated producers agreed a supply cut of 1.2 million barrels per day (bpd) from January. Despite this, the outlook for next year remains muted on the back of an economic slowdown. In global commodities markets, Brent crude oil futures edged lower. Brent for February 2019 settlement was off 20 cents at $61.47 a barrel.