Mumbai, March 11 Benchmark indices Sensex and Nifty declined in early trading on Wednesday after a day of relative calm amid ongoing tensions in the Middle East and continued outflows of foreign funds.
Weakness in blue-chip bank stocks also contributed to the decline in the markets.
The 30-share BSE Sensex fell by 96.12 points to 78,109.86 in early trading. The 50-share NSE Nifty declined by 22.95 points to 24,238.65.
Among the 30 companies in the Sensex, Kotak Mahindra Bank, ICICI Bank, Axis Bank, HDFC Bank, Hindustan Unilever, and Bajaj Finserv were among the biggest losers.
InterGlobe Aviation, Adani Ports, Tata Steel, and NTPC were among the gainers.
Brent crude, the global benchmark for oil, fell by 0.39 per cent to USD 87.46 per barrel.
According to exchange data, Foreign Institutional Investors (FIIs) sold equities worth Rs 4,672.64 crore on Tuesday, while Domestic Institutional Investors (DIIs) bought stocks worth Rs 6,333.26 crore.
"Although the equity markets staged a technical recovery on Tuesday, the underlying sentiment remains cautious as the deepening crisis in the Middle East begins to influence global financial markets through higher energy prices, disruptions to key shipping routes, and shifting investor risk appetite," said Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm.
From an equity market perspective, geopolitical disruptions of this nature tend to trigger sharp bouts of volatility as global investors rotate toward safer assets and reduce exposure to risk-sensitive markets, he added.
In Asian markets, South Korea's Kospi climbed over 3 per cent, while Japan's Nikkei 225 traded 2.5 per cent higher. The SSE Composite index and the Hang Seng index in Hong Kong were also in positive territory.
The US market ended flat on Tuesday.
"Global cues remain mixed as investors continue to closely track developments in the Middle East and the sharp swings in crude oil prices," said Hariprasad K, Research Analyst and Founder, Livelong Wealth.
On Tuesday, the Sensex jumped 639.82 points or 0.82 per cent to settle at 78,205.98. The Nifty climbed 233.55 points or 0.97 per cent to end at 24,261.60.