Jakarta. Indonesian stocks plunged 3.49% on Thursday, shedding 184 points to 5,098 as continued foreign selling, a rupiah exchange rate above Rp 18,000 per US dollar and mounting domestic political tensions intensified pressure on the market.

Jakarta Composite Index (JCI) traded between 5,098 and 5,305 during the session. Trading volume reached 23.19 billion shares, with turnover totaling Rp 11.22 trillion ($618.24 million) across more than 1.3 million transactions. Declining stocks overwhelmed gainers, with 624 losers, 98 gainers and 70 unchanged.

Pilarmas Investindo Sekuritas attributed the decline to persistent risk-off sentiment among investors, compounded by continued foreign net selling in the domestic stock market.

“This situation is accompanied by continued net selling of stocks by foreign investors in the domestic capital market,” Pilarmas wrote in its research note on Thursday.

The brokerage also pointed to escalating student protests in several major cities as an additional source of political risk. Meanwhile, oil prices remaining above $100 per barrel have heightened concerns about fiscal pressures and inflation.

“The rupiah trading above Rp 18,000 per US dollar is also a concern for investors,” Pilarmas added.

The domestic market's steep decline contrasted with gains on Wall Street in the previous session, after the US Federal Reserve kept its benchmark interest rate unchanged at 3.75% to 4%, in line with market expectations. However, the decision exposed divisions among policymakers, with two Fed officials supporting a 25-basis-point rate increase.

The disagreement has kept investors alert to the possibility of another rate hike in December, particularly as energy costs fuel inflationary pressures.

Asian markets delivered a mixed performance on Thursday. Japan's Nikkei 225 climbed 1.1%, while South Korea's Kospi fell 1.2%. Hong Kong's Hang Seng Index shed 0.6%, and the Shanghai Composite Index declined 0.8%.

Pilarmas said investors were also awaiting the US personal consumption expenditures (PCE) price index, a key inflation gauge monitored by the Fed, for further clues on the central bank's monetary policy direction.

Geopolitical developments in the Middle East continued to weigh on sentiment, with investors monitoring diplomatic efforts to prevent further escalation.

“Meanwhile, high oil prices could sustain inflationary pressures and expectations of higher interest rates,” Pilarmas said.

Separately, capital market observer Elandry Pratama said that global investors had become more selective and cautious in allocating funds, particularly to emerging markets, citing from Antara.

Domestic investors, meanwhile, could adopt a wait-and-see stance while monitoring the JCI's stability and developments in local market sentiment.

“However, investor responses are not uniform. Some continue to see opportunities to accumulate shares with attractive fundamentals and valuations,” Elandry said.

Regarding the stocks weighing on the index, Elandry said selling pressure generally came from the financial sector, particularly large-cap banking stocks, as well as energy and infrastructure stocks and conglomerate-linked shares.

“To determine which sectors weighed most heavily on the market during Thursday's session, we need to examine each stock's contribution to the index decline, rather than just the percentage drop in its share price,” he said.

In the short to medium term, Elandry expects the JCI to remain volatile and sensitive to global sentiment, foreign capital flows and regulatory policies. He said a more sustained recovery would require stabilizing capital flows, restoring investor confidence and stronger support from corporate fundamentals.

“Investors should remain disciplined in managing risk, avoid rushing to average down, and focus on stocks with strong fundamentals and more reasonable valuations,” Elandry said.

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