Indian indices started the day over 1.5 percent lower following losses in global peers as geopolitical tensions escalated after Russia ordered troops into eastern Ukraine.
The Sensex fell as much as 1.9 percent or 1,143 points to 56,714 while the Nifty lost 293 points to 16,913. Broader markets also worsened with the midcap and smallcap index down 1.7 percent and 2.3 percent, respectively.
India VIX, which measures the volatility, surged over 18 percent in early morning deals.
Russian President Vladimir Putin recognised two breakaway regions in eastern Ukraine as independent on Monday and ordered the Russian army to launch what Moscow called a peacekeeping operation into the area, accelerating a crisis the West fears could unleash a major war, reported Reuters.
It added that Putin told Russia's defence ministry to deploy troops into the two regions to "keep the peace" in a decree issued shortly after announcing recognition for Russian-backed separatists there, drawing U.S. and European condemnation and vows of new sanctions.
Global peers across the world declined post the recent escalation by Russia.
"Escalations in Ukraine tensions with Russia recognising two pro-Russian rebel regions have aggravated the crisis. The economic consequences are already visible in higher crude and gold prices. The situation remains fluid; we don't know whether the tensions will escalate or be contained from now on," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Back home, all sectors were also in the red with Nifty PSU Bank index down the most, 2.3 percent. Nifty Bank, Nifty Fin Services, Nifty Metal and Nifty IT also lost over 1.5 percent each while Nifty Auto, Nifty FMCG shed over a percent each.
On the Nifty50 index, TCS, L&T, Coal India, Dr Reddy's and UPL were the top losers while ONGC was the only gainer. Meanwhile, on BSE Sensex, all stocks were trading in the red.
Even on the Nifty500 index, only 20 stocks were trading in the green while the remaining 480 were in the red. M&M, Indiabulls Real Estate, Thyrocare Tech, Grindwell Norton and BASF India were the top gainers on the Nifty500 index while Dhani Services, Union Bank of India, Adani Total, TV18 Broadcast and Suzlon Energy led the losses.
Vijaykumar added that the biggest macro headwind for India is crude racing to $97. "The inflationary consequence of this will force the RBI to abandon its dovish monetary stance. Globally stock markets have turned weak. Buying opportunities may emerge in this correction. But investors need not rush in to buy. The situation is fluid. FIIs are likely to continue selling. This will continue to depress the prices of some high-quality financials. Nibbling in this segment can be considered," he stated.