New Delhi: Benchmark indices Sensex and Nifty dropped sharply in early trade on Monday as the Middle East conflict entered its fourth week driving crude oil prices higher.
A massive bearish trend in global equity markets and relentless foreign fund outflows also made investors jittery.
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The 30-share BSE Sensex dived 1,555.62 points, or 2 percent, to 72,977.34 during initial trade. The 50-share NSE Nifty tanked 479.95 points, or 2 percent, to 22,634.55.
From the 30-Sensex firms, Tata Steel, State Bank of India, Bajaj Finance, Bharat Electronics, Titan, and Adani Ports were among the biggest laggards.
HCL Tech emerged as the only winner.
Brent crude, the global oil benchmark, climbed 0.62 percent to USD 112.9 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 were trading sharply lower. Kospi dived nearly 6 percent.
The US market ended significantly lower on Friday.
"The weakness reflects a significant deterioration in global risk sentiment, as geopolitical tensions in the Middle East continue to escalate. Asian markets have opened deep in the red, with Japan's Nikkei declining nearly 4.6 percent and South Korea's Kospi falling over 6 percent, underscoring a broad-based risk-off move.
"The escalation in rhetoric between the United States and Iran, particularly around the strategic Strait of Hormuz, has heightened fears of potential supply disruptions in global energy markets," Hariprasad K, Research Analyst and Founder, Livelong Wealth, said.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,518.39 crore on Friday, according to exchange data. Domestic Institutional Investors (DIIs), however, bought stocks worth Rs 5,706.23 crore. Foreign investors have pulled out Rs 88,180 crore (about USD 9.6 billion) from Indian equities so far this month.
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On Friday, the Sensex climbed 325.72 points, or 0.44 percent, to settle at 74,532.96. The Nifty edged higher by 112.35 points, or 0.49 percent, to end at 23,114.50.
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