Mumbai: Weak global markets coupled with concerns over oil prices and assembly elections rattled Indian markets on Thursday, sending local shares sharply lower. The Sensex and Nifty indices dropped around 1.6%, amid concerns over slowing global growth and doubts that the US-China trade war will abate anytime soon. The 30-share Sensex closed at 35,312.13 points, down 572.28 points, or 1.59%, while the Nifty ended at 10,601.15, falling 181.75 points, or 1.69%.

Crude price slipped 2.26% on Thursday even as US President Donald trump urged the Organisation of Petroleum Exporting Countries (Opec) not to curb oil supplies before the start of a key meting. Oil veered between gains and losses as uncertainty lingers over the scale of output cuts. So far this year, crude prices have fallen 10.9% and are currently down 32% from their 2018 peak of $86.29 per barrel on 3 October.

Jayant Manglik, president, Religare Broking Ltd, said the markets were pressured by weak global markets and anxiety ahead of key events. “Sentiment was downbeat from the beginning, citing weak global markets ahead of the Opec meet. Besides, rising anxiety among the participants ahead of assembly elections results and the deterioration of rupee further dampened the mood. Markets have been behaving extremely volatile for last one month and still there’s no sign of slowing down," he added.

Among Asian indices, Hong Kong’s Hang Seng index fell 2.47%, China’s Shanghai Composite fell 1.68% and South Korea’s Kospi index fell 1.55%.

Oil had recovered from some of last month’s losses after Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed over the weekend to extend their deal to manage the oil market into 2019. Traders are waiting to see whether the Opec and its allies, including Russia, can put together a final pact after Saudi Arabia appeared to backtrack on calls for 1 million barrels a day of cuts.

Investors also remained jittery ahead of state election results due next week. “Proximity to general elections increases the market relevance of the state elections. Results will be taken as a reflection of the underlying mood, especially on reform-led disruption and regional hot-button issues like rural policies and concern over farm distress," said Radhika Rao, economist at DBS Bank, in a 26 November note.

Global markets fell after the arrest of chief financial officer (CFO) of Chinese technology giant Huawei Technologies Co. reignited concerns about US-China tensions.

Canadian authorities in Vancouver arrested the Huawei CFO at the request of the US government for alleged violations of Iranian sanctions. This is the latest move by Washington to crack down on the Chinese cellular technology giant.

 Shares of non-banking financial companies (NBFCs) slumped after the Reserve Bank of India (RBI) dashed hopes of any special liquidity window for them—a key government demand to keep adequate liquidity in the system—but signalled more bond purchases via open market operations (OMOs) till end of March.

The yield on the 10-year government bond opened 3 basis points lower to hit a fresh eight-month low after RBI assured that it will continue with increased bond purchases through OMOs to provide liquidity till March-end.

The 10-year government bond yield ended at 7.425%— a level last seen on 13 April— from its previous close of 7.441%.

Bond yields and prices move in opposite directions.

“The announcement of continued open market operations to inject liquidity would complement the impact of the recent decline in the US 10-year yield and some stabilization in crude oil prices at a moderate level" said Naresh Takkar, managing director and group CEO, Icra Ltd.

Takkar expected the 10-year bond yield to trade in a band of 7.3-7.7% for the remainder of this quarter.

On Wednesday, RBI kept its interest rates unchanged for the second straight meeting and lowered its inflation projection sharply to 2.7-3.2% from 3.9-4.5% for the second half of 2018-19, taking into account the fall in food inflation, crude prices and appreciating rupee. The central bank expects inflation to rise to 3.8-4.2% in the first half of 2019-20.

(Bloomberg contributed to the story)