Indian shares closed lower on Monday, snapping a streak of six straight sessions of gains, as a fresh border flare-up between India and China outweighed initial optimism from further opening of the economy.
The NSE Nifty 50 index closed down 2.23% at 11,387.50, while the S&P BSE Sensex ended 2.13% lower at 38,628.29.
India foiled an attempt by Chinese troops to encroach over the countries' disputed and ill-defined border in the western Himalayas, in a fresh flare-up of tensions that have been running high for several months.
The news undid initial optimism over the government's further relaxation of coronavirus restrictions, which include reopening of underground train networks and allowing sports and religious events in a limited manner from next month.
"The market was trading in an over-bought zone, so a selloff was expected, and the news of fresh tensions at (the India-China) border has impacted sentiment," said Rahul Sharma, market strategist and head of research at Equity99 in Mumbai.
The Indian rupee also retreated from near six-month highs on the border tensions.
In Mumbai, all major sectoral indexes ended in the red, with the Nifty bank index closing 3.14% lower, after a 13.3% rally this month. Lender State Bank of India was among the top percentage losers, falling 5.7%.
Shares in Indian conglomerate Future Group's companies ended higher after Reliance Industries Ltd said it would buy the group's retail arm in a $3.38 billion deal, including debt.
Investors will also focus on India's June-quarter gross domestic product data expected at around 1200 GMT on Monday. The world's fifth largest economy likely suffered its biggest quarterly slump on record, the data is likely to show.
Other global stocks hovered near record highs on Monday, as investors bet on central banks keeping up stimulatory monetary and fiscal policies.