Indian equity markets opened sharply lower on Wednesday as escalating tensions between the United States and Iran dampened investor sentiment, raising concerns over a prolonged conflict in West Asia. 

At 9:26 AM, the BSE Sensex was down 746.68 points, or 1.00%, at 73,903.16 while the NSE Nifty 50 declined 181 points, or 0.77%, to 23,302.55. 

Broader markets also traded in the red, with the Nifty MidCap and Nifty SmallCap indices falling 0.67% and 0.48%, respectively. 

Nifty IT slips 3%

Among sectoral indices, Nifty IT emerged as the worst performer, dropping more than 3%. Nifty Realty and Nifty PSU Bank indices also witnessed significant selling pressure. In contrast, Nifty Metal outperformed its peers, registering the smallest decline among major sectors. 

Market sentiment remained fragile after US Secretary of State Marco Rubio told the Senate Foreign Relations Committee that Iran had mined large sections of the Strait of Hormuz and fired upon commercial ships. The remarks fuelled fears that Washington and Tehran remain far from reaching a peace agreement, increasing the likelihood of a prolonged conflict in the region. 

In Asian markets, Japan's Nikkei 225 index and Shanghai's SSE Composite index quoted higher while Hong Kong's Hang Seng index traded lower. US markets ended in positive territory on Tuesday.

RBI MPC

Meanwhile, investors are also closely tracking domestic developments, with the Reserve Bank of India's Monetary Policy Committee (MPC) beginning its three-day policy meeting on Wednesday. The central bank's policy decision later this week is expected to provide further direction to the markets. 

On Tuesday, the Sensex climbed 382.50 points, or 0.52%, to settle at 74,649.84. The Nifty rose by 100.95 points, or 0.43%, to end at 23,483.55.