The Chinese mainland's stock market dropped sharply on its first trading day in October, due to overseas market fluctuations and uncertainties during the week-long National Day holiday.

The benchmark Shanghai Composite Index slumped 3.72 percent to close at 2716.51 points on Monday, while the Shenzhen Component Index went down 4.05 percent to 8060.83 points.

More than 3,200 stocks, accounting for about 90 percent of the A-share market, closed lower, and the net outflow through stock connect programs reached 9.6 billion yuan ($1.4 billion), the second highest level this year.

A-share investors panicked as stock markets in the United States and Hong Kong dropped considerably during the holiday, which was the major reason for Monday's slump, the Hebei province-based Yuanda Investment Consultancy said.

Over the trading days during the holiday, Hong Kong's flagship Hang Seng Index lost 4.38 percent, while the S&P 500 index and the Nasdaq Composite Index went down 0.97 and 3.21 percent, respectively.

As expectations of a US rate hike strengthened, yields of US treasuries went up during the holiday week, driving the decline in stocks worldwide, according to Yuanda's analysis.

"Escalating global trade uncertainties affected the A-share market on Monday," said Liu Chunsheng, an associate professor at the Central University of Finance and Economics.

Liu said that the cut in the reserve requirement ratio for commercial banks, which was announced by the central bank on Sunday, would support the A-share market amid a recent spate of bad news, as it could improve market liquidity and reduce the financing costs of enterprises.

"The A-share market faces some challenges in the short-term, considering the stronger US dollar, external uncertainties and investors' preferences for low-risk assets," said Zhang Xia, chief strategy analyst at China Merchants Securities Co Ltd.

But with the easing of risks and more supportive polices for the market and the real economy, Zhang was optimistic about the mid and long-term market prospects.