Benchmark equity indices Sensex and Nifty slumped 1 per cent in afternoon trade after opening higher on Friday as soaring crude oil prices amid escalating tensions in West Asia and foreign fund outflows dampened investors' sentiment.
The 30-share BSE Sensex opened on a positive note but later tumbled 730.30 points, or 1 per cent, to 72,519.09 during afternoon trade. Similarly, the NSE Nifty50 pared initial gains to slump 260.75 points, or 1.15 per cent, to 22,426.90.
Tata Steel plunged over 5 per cent to emerge as the biggest laggard among Sensex constituents, followed by Adani Ports, Titan, Trent, Bharat Electronics Ltd, NTPC, IndiGo, Hindustan Unilever, Bajaj Finserv, and Bajaj Finance.
In contrast, Eternal, Tata Consultancy Services, Infosys, Larsen & Toubro and HDFC Bank were among the gainers.
Brent crude, the global oil benchmark, rose nearly 1 per cent to USD 114 per barrel after escalating geopolitical tensions in West Asia.
Analysts said domestic equities began the session on a positive note, but the rally proved short-lived as rising crude prices and persistent global uncertainties kept investors cautious.
"Recent price action reflects tentative buying at lower levels, while continued FII selling and elevated volatility could keep traders selective. The market's ability to absorb global pressure and sustain early gains will be key to the next directional move," said Hitesh Tailor, Technical Research Analyst at Choice Broking.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,458.70 crore on Thursday, while Domestic Institutional Investors (DIIs) bought shares worth Rs 2,891.32 crore, according to the exchange data.
Asian markets recovered from early losses to settle largely higher, with Shanghai's SSE Composite Index, Hong Kong's Hang Seng and South Korea's Kospi ending in positive territory. Japan's Nikkei 225 benchmark, however, closed lower.
European markets were trading in negative territory on Friday. US equity markets finished lower in overnight deals on Thursday.
On Thursday, the 30-share BSE Sensex declined 460.30 points to close at 73,249.39, while the broader NSE Nifty dropped 123.70 points to settle at 22,687.65, extending their slide to a third straight session.