Traders said a weak rupee and frequent foreign fund outflows also weighed on the sentiment.
Equity indices gave up early gains to close in the red for a second straight session on Thursday as oil prices jumped amid the ongoing conflict between Russia and Ukraine.
Fears of supply disruptions pushed crude prices up to USD 120 a barrel as Western countries tightened sanctions on Russia, which accounts for about 10 percent of global oil production.
Traders said a weak rupee and frequent foreign fund outflows also weighed on the sentiment.
The 30-share BSE Sensex started trading on a firm footing and jumped 527.72 points to reach a high of 55,996.62 in morning deals. However, it gave up all its early gains during the afternoon session and ended with a loss of 366.22 points or 0.66 per cent at 55,102.68.
Similarly, the broader NSE Nifty ended 107.90 points or 0.65 per cent lower at 16,498.05.
UltraTech Cement was the biggest drag among Sensex constituents, falling 6.47 per cent, followed by Asian Paints, Dr Reddy’s Laboratories, Maruti Suzuki India, Hindustan Unilever Ltd and ICICI Bank.
In contrast, PowerGrid, Wipro, Tech Mahindra, HCL Tech, ITC, Tata Steel and Infosys were among the major gainers, rising up to 3.34 per cent.
According to Mitul Shah, Head of Research, Reliance Securities, “Domestic equity markets closed lower as the geopolitical scenario worsened due to the Russia-Ukraine crisis. A rise in crude oil prices due to supply disruptions by Russian sanctions dented the situation. increased further.”
Vinod Nair, Head of Research, Geojit Financial Services, said release of strategic reserves of oil in India and abroad as well as increase in production from OPEC is expected to bring down crude oil prices in future.
“In addition, the Indian market will look at the exit poll data for state elections, while the global market will track war developments, the status of the BoE and Fed policy meeting from next week,” he added.
Among sectors, BSE Auto was the biggest loser at 2.24 per cent, followed by consumer discretionary goods and services, bank and capital goods, while utilities, power and oil and gas gained.
BSE Midcap and Smallcap indices closed with a mixed trend.
International oil benchmark Brent crude rose 2.75 per cent to $116.03 a barrel.
Shares in Hong Kong and Tokyo closed higher, while Shanghai was marginally lower.
Stock exchanges in the US closed in positive territory in the overnight session. European markets remained mostly lower in the afternoon session.
On Thursday, the rupee had closed 16 paise lower at 75.96 against the US dollar.
Foreign institutional investors continued their sell-off in the Indian markets as they sold shares worth Rs 4,338.94 crore on a net basis on Wednesday, according to exchange data.
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