Mumbai, March 19 The benchmark indices in the Indian stock market, Sensex and Nifty, fell in early trading on Thursday after a three-day rally, following a sharp increase in crude oil prices and weak global trends.
Furthermore, continued outflows of foreign funds also dampened market sentiment, analysts said.
The 30-share BSE Sensex fell by 1,953.21 points, or 2.54 percent, to 74,750.92 in opening trade. The 50-share NSE Nifty dropped by 580.05 points, or 2.43 percent, to 23,197.75.
Among the 30 companies in the Sensex, HDFC Bank declined by over 3 percent, as Atanu Chakraborty resigned as chairman of the country's second-largest lender, citing ethical concerns.
Larsen & Toubro, Axis Bank, Mahindra & Mahindra, Eternal, and Bajaj Finance were also among the major decliners.
NTPC and Power Grid were the only gainers.
Brent crude, the global benchmark for oil, rose by 3.77 percent to USD 111.4 per barrel.
"Brent crude has risen to USD 111. This is bad news for oil and gas importers like India. If Brent remains above USD 110 for a sustained period, it will have negative implications for India's macro-economic indicators," said V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
The market has been highly volatile in response to developments on the war front and crude prices, he added.
In Asian markets, the South Korean Kospi, the Japanese Nikkei 225 index, the Shanghai SSE Composite index, and the Hong Kong Hang Seng index were trading significantly lower.
The US market ended sharply lower on Wednesday.
"Sentiment has weakened significantly following a sharp surge in crude oil prices, as escalating tensions in the Middle East and reports of attacks on key energy infrastructure have intensified concerns about supply disruptions," said Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm.
Foreign Institutional Investors (FIIs) sold equities worth Rs 2,714.35 crore on Wednesday, according to exchange data. Domestic Institutional Investors (DIIs), however, bought stocks worth Rs 3,253.03 crore.
Continued FII selling reflects a clear risk-off approach, with sustained capital outflows weighing on market stability, Ponmudi added.
On Wednesday, the Sensex jumped by 633.29 points, or 0.83 percent, to settle at 76,704.13. The Nifty surged by 196.65 points, or 0.83 percent, to end at 23,777.80.