MUMBAI: Stock market benchmark indices Sensex and Nifty tumbled in early trade on Thursday after a three-day rally following a sharp jump in crude oil prices and weak global trends.
Moreover, unabated foreign fund outflows also dented market sentiments, analysts said.
The 30-share BSE Sensex tanked 1,953.21 points, or 2.54 per cent, to 74,750.92 in opening trade. The 50-share NSE Nifty dropped 580.05 points, or 2.43 per cent, to 23,197.75.
From the 30-Sensex firms, HDFC Bank declined over 3 per cent as in a sudden move, Atanu Chakraborty resigned as chairman of the country's second biggest lender, citing ethical concerns.
Larsen & Toubro, Axis Bank, Mahindra & Mahindra, Eternal and Bajaj Finance were also among the major laggards.
NTPC and Power Grid were the only gainers.
Brent crude, the global oil benchmark, jumped 3.77 per cent to USD 111.4 per barrel.
"Brent crude has shot up to USD 111. This is bad news for oil and gas importers like India. If Brent remains above USD 110 for an extended period of time, that will have negative implications for India's macros," V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said.
The market has been exceedingly volatile in response to developments on the war front and crude prices, he added.
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 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 reported attacks on key energy infrastructure have intensified concerns over supply disruptions," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.
Foreign Institutional Investors (FIIs) offloaded 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 633.29 points, or 0.83 per cent, to settle at 76,704.13. The Nifty surged 196.65 points, or 0.83 per cent, to end at 23,777.80.