Mumbai, March 2 The benchmark indices Sensex and Nifty plunged by over 1 per cent on Monday as investor sentiment was significantly affected by a sharp increase in crude oil prices amid escalating tensions in West Asia.
Weak trends in global markets and heavy outflows of foreign funds also dampened sentiment.
The 30-share BSE Sensex fell by 2,743.46 points or 3.37 per cent to 78,543.73 in early trading. It later closed at 80,238.85, down 1,048.34 points or 1.29 per cent.
The 50-share NSE Nifty tumbled by 575.15 points or 2.28 per cent to 24,603.50 during intra-day trading. The benchmark later settled down by 312.95 points or 1.24 per cent at 24,865.70.
Among the Sensex stocks, InterGlobe Aviation, Larsen & Toubro, Adani Ports, Maruti, Asian Paints, and Bajaj Finserv were among the biggest losers.
Bharat Electronics, Sun Pharma, and ITC were the only gainers.
Brent crude, the global benchmark, rose by 8.34 per cent to USD 78.95 per barrel.
"Indian equity markets closed with a bearish tone after opening sharply lower in response to the deepening military conflict across the Middle East, which pushed crude oil prices significantly higher," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.
Iran's Supreme Leader Ayatollah Ali Khamenei was killed in a coordinated US-Israeli airstrike on Tehran on Saturday, with Iranian state media confirming his death on Sunday.
Iran began firing missiles at Israel and Arab countries in the region in retaliation for the killing of its supreme leader.
The BSE smallcap select index fell by 1.81 per cent, and the midcap select index dropped by 1.67 per cent.
Among sectoral indices, services fell by 3.81 per cent, consumer durables (2.30 per cent), auto (2.23 per cent), consumer discretionary (2.16 per cent), oil & gas (2.15 per cent), industrials (2.14 per cent), and energy (2.06 per cent).
A total of 3,561 stocks declined, while 821 advanced and 146 remained unchanged on the BSE.
In Asian markets, Japan's Nikkei 225 fell by over 1 per cent, and Hong Kong's Hang Seng index tumbled by more than 2 per cent, while Shanghai's SSE Composite index ended in positive territory. Equity markets were closed in South Korea due to a holiday.
Markets in Europe were trading sharply lower.
The US market ended lower on Friday.
"Rising geopolitical tensions in the Middle East have unsettled global markets, with concerns over a possible extension of the situation given the killing of Iran's supreme leader."
"Rising crude oil prices and a weakening INR reflect concerns over potential disruptions to oil supply, which could increase inflationary pressures in India and impact fiscal and strain margins for energy and chemical-dependent sectors," Vinod Nair, Head of Research, Geojit Investments Ltd, said.
The India VIX has edged higher, signalling increased uncertainty and risk aversion among market participants, he added.
"Indian equities ended the session on a cautious note, with the Nifty witnessing volatility through the day as escalating geopolitical tensions weighed on investor sentiment. The ongoing war-related developments have kept global risk appetite fragile, particularly with crude oil prices inching higher. A sustained rise in oil remains a key monitorable for India, given its implications on inflation, fiscal math, and corporate margins," Vikram Kasat, Head - Advisory, PL Capital, said.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 7,536.36 crore on Friday, according to exchange data. Domestic Institutional Investors (DIIs), however, bought stocks worth Rs 12,292.81 crore.
On Friday, the Sensex tanked 961.42 points or 1.17 per cent to settle at 81,287.19. The Nifty tumbled 317.90 points or 1.25 per cent to end at 25,178.65.
Equity markets will remain closed on Tuesday for Holi.
