Mumbai, April 9 Equity benchmark indices ended lower on Thursday, with the Sensex falling by 931 points after a spectacular rally in the previous session, as renewed tensions in West Asia dampened the optimism stemming from the ceasefire.
The ceasefire agreement appeared to be in jeopardy after Iran closed the Strait of Hormuz again in response to Israeli attacks on Lebanon.
Weak trends in Asian and European markets, a rise in crude oil prices, and continued outflows of foreign funds also made investors nervous in the domestic market.
The 30-share BSE Sensex dropped by 931.25 points or 1.20 per cent to close at 76,631.65. During the day, it fell by 1,215 points or 1.56 per cent to 76,347.90.
The 50-share NSE Nifty declined by 222.25 points or 0.93 per cent to close at 23,775.10.
Among the major decliners from the 30-Sensex firms were InterGlobe Aviation, Larsen & Toubro, Eternal, HDFC Bank, ICICI Bank, and Kotak Mahindra Bank.
Bharat Electronics, Power Grid, NTPC, and Tata Consultancy Services were among the gainers.
Brent crude, the global oil benchmark, rose by 3.27 per cent to USD 97.85 per barrel.
In Asian markets, South Korea's benchmark Kospi, Japan's Nikkei 225 index, Shanghai's SSE Composite index, and Hong Kong's Hang Seng index ended lower after a sharp rally in the previous trading session.
European markets were trading in negative territory.
"Optimism related to the ceasefire faded as renewed US-Iran tensions and ongoing restrictions at the Strait of Hormuz pushed crude prices up, reviving concerns about inflation in India. Domestically, profit-booking, rising 10-year bond yields, and a weakening rupee reduced near-term risk appetite. The financial sector led the decline after the previous session's sharp rally amid sustained selling by foreign institutional investors, while broader markets remained relatively stable," said Vinod Nair, Head of Research, Geojit Investments Limited.
According to exchange data, Foreign Institutional Investors (FIIs) sold equities worth Rs 2,811.97 crore on Wednesday. Domestic Institutional Investors (DIIs), however, bought stocks worth Rs 4,168.17 crore.
US markets ended significantly higher on Wednesday. The Dow Jones Industrial Average jumped by 2.85 per cent, the Nasdaq Composite surged by 2.80 per cent, and the S&P 500 climbed by 2.51 per cent.
"Indian markets witnessed a correction, ending a recent five-day gaining streak as sentiment turned cautious amid fading confidence around the US-Iran ceasefire. After a sharp rally in the previous session, today's decline appears largely driven by profit-booking, with investors choosing to lock in gains rather than taking on fresh risk in an uncertain environment," said Hariprasad K, Research Analyst and Founder, Livelong Wealth.
On Wednesday, the Sensex jumped by 2,946.32 points or 3.95 per cent to close at 77,562.90. The Nifty soared by 873.70 points or 3.78 per cent to end at 23,997.35.