Benchmark indices S&P BSE Sensex and Nifty 50 ended Monday on a dismal note, tracking weak global cues as the West Asia crisis intensified, keeping investors firmly in risk-off mode.

The Sensex settled 1,836.57 points or 2.46% lower at 72,696.39, while the broader Nifty closed at 22,512.65, down 601.85 points or 2.6%.

Broad-based sell-off across sectors

The sell-off was widespread, with all sectoral indices closing in the red, reflecting a sharp deterioration in market sentiment. Midcap and smallcap stocks also witnessed heavy selling, underperforming the benchmark indices amid elevated volatility.

Metals bore the brunt of the decline, with the Nifty Metal index falling nearly 5%, as global risk aversion, a stronger US dollar, and rising bond yields triggered liquidation in commodity-linked counters.

Banking and financial stocks continued to remain under pressure, dragging the indices lower, while sectors such as consumer durables, realty, oil & gas, and chemicals declined in the range of 3–5%.

IT shows relative resilience

In an otherwise weak market, the IT sector emerged as a relative outperformer.

The sharp depreciation in the Indian rupee, which hit fresh record lows during the session, provided a tailwind to export-oriented IT companies. Stocks such as TCS, Infosys, and HCLTech saw selective buying interest, limiting downside in the sector. Nifty IT closed 0.18% lower on Monday.

Volatility spikes, sentiment turns risk-averse

Volatility surged sharply during the session, with India VIX rising to near 27 before settling at around 26.8, indicating heightened nervousness among investors.

Livelong Wealth's Hariprasad K said the sharp correction means a clear shift in sentiment from consolidation to risk aversion, with global macro concerns driving a deeper repricing of risk assets.

"From a technical standpoint, the breakdown below the 23,000 psychological level marks a significant shift in market structure, reinforcing the prevailing bearish sentiment. The Nifty is currently attempting to stabilise near the 22,500 zone, which remains a crucial OI-based demand area. A decisive breach below this level could accelerate the downside towards 22,300, followed by the critical 22,000 zone, which acts as a major structural support backed by strong positioning."

"On the upside, 22,700 now acts as an immediate resistance, while 23,000 has transitioned into a strong supply zone after the breakdown, and is likely to witness selling pressure on any pullback," he added.

West Asia tensions, crude prices weigh on markets

Escalating geopolitical tensions in West Asia remained the key trigger for the sell-off.

The ongoing conflict has disrupted global energy markets, with crude oil prices sustaining above the $100 mark. This has intensified concerns around inflation, current account deficit, and corporate margins for an oil-importing economy like India.

Ponmudi R, CEO of Enrich Money, said that rising war rhetoric and risks around the Strait of Hormuz have majorly dented investor confidence, leading to broad-based selling across sectors.

"The IEA reported that more than 40 key energy assets across the Gulf region have been severely damaged since the onset of hostilities, highlighting the structural risks to global energy supply. Adding to this, Moody’s Analytics has warned that a sustained conflict could drag India’s GDP nearly 4% below its baseline trajectory—one of the steepest projected impacts in the Asia-Pacific region—primarily due to India’s heavy dependence on energy imports from the Gulf. This raises serious concerns over medium-term growth, inflation trajectory, and fiscal stability," he added.