Market benchmark Sensex Monday nosedived 495 points to end at 38,645 owing to intense sell-offs in energy and financial stocks as investors weighed soaring crude oil prices and a mixed start of the corporate earnings season.
The broader NSE Nifty too shed over 158 points to close at 11,594.
Market sentiment was hit as macroeconomic worries resurfaced following reports that the US will end sanctions waiver on Iranian oil imports. Soaring crude prices at a six-month high level led to massive sell-offs on bourses.
Besides, the weakening rupee and a caution ahead of some key corporate results also played in the minds of investors.
Rising crude prices are negative for oil importing countries like India as higher prices lead to widening of fiscal deficit and put the currency under pressure.
The 30-share BSE index settled 495.10 points, or 1.26 per cent, lower at 38,645.18; while the broader NSE Nifty tumbled 158.35 points, or 1.35 per cent, to close at 11,594.45.
Sensex heavyweight Reliance Industries fell 2.76 per cent. In percentage terms, major laggards were Yes Bank, Indusind Bank, RIL, ICICI Bank, HDFC and Axis Bank -- plunging as much as 6.62 per cent.
While, bucking weak market trend, Bharti Airtel, TCS, Infosys, NTPC and PowerGrid ended in the green, rising up to 0.89 per cent.
Sectorally, BSE energy slumped 2.72 per cent, tracking developments around US sanctions on Iranian oil imports. BSE finance slipped 2 per cent as Jet Airways crisis loomed large over health of banks and lenders.
Running into debt of more than Rs 8,500 crore, Jet Airways has shut down operations temporarily after lenders decided against extending emergency funds for its survival.
Meanwhile, shares of Jet Airways continued to fall for the third day in a row on Monday, tumbling over 23 per cent.
Analysts said investors also turned cautious ahead of announcement of results from key index heavy weights including large corporate banks.
"Indian markets had a rough day on the back of sharp rise in crude oil price above USD 74 per barrel. As a significant importer of crude oil, the high oil price is not good for Indian macros," said Jagannadham Thunuguntla, Sr VP and Head of Research (Wealth), Centrum Broking.
According to a report, US Secretary of State Mike Pompeo is set to announce that as of May 2, the State Department will no longer grant sanctions waivers to any country that is currently importing Iranian crude or condensate.
China and India are currently the largest importers of Iranian oil. If they don't go along with Trump's demands, that could cause tensions in both bilateral relationships and spill over into other issues, like trade, the report said.
Reacting to reports on US terminating exemptions on Iranian oil imports, global benchmark Brent crude climbed to a multi-month high of USD 73.81 per barrel, a 2.56 per cent rise.
As a result, the rupee Monday dropped 32 paise to 69.67 against the US dollar.
Meanwhile, foreign institutional investors (FIIs) purchased equity worth Rs 73.08 crore on Monday, and domestic institutional investors (DIIs) sold shares to the tune of Rs 68.16, provisional data available with stock exchanges showed.
Elsewhere in Asian markets, China dropped up to 1.70 per cent. South Korea and Japan also ended higher.
European bourses remained closed on account of Easter Monday.
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