MUMBAI: Benchmark indices Sensex and Nifty tumbled in early trade on Friday as surging oil prices and unabated foreign fund outflows unnerved investors.
Weakness in IT stocks and a negative trend in global markets also weighed on investor sentiment.
The 30-share BSE Sensex dropped 330 points to 77,334 in early trade.The 50-share NSE Nifty declined 93.3 points to 24,079.75.
Later, the BSE benchmark quoted 772.35 points lower at 76,876.79, and the Nifty tanked 205.45 points to 23,967.60.
From the 30-Sensex firms, HCL Tech, Infosys, Tata Consultancy Services, Sun Pharma, Tech Mahindra and Bharti Airtel were among the major laggards.
UltraTech Cement, Mahindra & Mahindra, State Bank of India and Hindustan Unilever were among the winners.
Brent crude, the global oil benchmark, traded 0.89 per cent higher at USD 106 per barrel.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,254.71 crore on Thursday, according to exchange data.
"The broader sentiment remains fragile, shaped largely by persistent geopolitical uncertainty.
Developments in West Asia continue to influence market psychology.
Although the ceasefire between Israel and Lebanon has been extended by three weeks following diplomatic engagement led by Donald Trump, the extension is being viewed as a temporary relief rather than a structural resolution," Hariprasad K, Research Analyst and Founder, Livelong Wealth, said.
The underlying tensions, particularly around Iran, continue to keep risk appetite in check, he added.
In Asian markets, South Korea's benchmark Kospi, Shanghai's SSE Composite index and Hong Kong's Hang Seng index were trading lower, while Japan's Nikkei 225 index quoted higher.
US markets ended lower on Thursday.
"Crude oil prices remain elevated above the USD 100 per barrel mark, driven by supply disruptions and rising tensions around the Strait of Hormuz, adding to macroeconomic concerns," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.
On Thursday, the Sensex tumbled 852.49 points or 1.09 per cent to settle at 77,664.
The Nifty dropped 205.05 points or 0.84 per cent to end at 24,173.05.