The BSE Sensex fell as much as 464.64 points to an intraday low of 78,077.80, while the NSE Nifty dropped 143.45 points to a low of 24,440.35, both benchmarks extending losses from Monday's session amid mounting concerns over elevated crude prices.
The slide brought the Sensex within striking distance of the closely watched 78,000 level, and market participants warned that a continued sell-off could push the Nifty below the 24,000 mark in the sessions ahead.
Brent crude touched a one-week high of USD 88.09 a barrel on Tuesday as hopes for a swift US-Iran resolution faded after the two sides traded fresh demands over compensation, with Washington seeking payment from Tehran, and Iran reiterating its conditions for reopening the Strait of Hormuz.
Higher oil prices pose a particular risk for India, the world's third-largest crude importer, since they threaten to widen the import bill, stoke inflation and squeeze corporate margins.
Financial stocks led the decline, with heavyweight banks and private banks each falling around 0.9 per cent, dragging the broader financials index down 0.7 per cent.
IT stocks provided a rare green patch, rising roughly 0.3 per cent on continued optimism over a softer US interest rate trajectory, extending a three-session gain of about 2 per cent.
Foreign institutional investors (FIIs) remained net buyers, purchasing equities worth ₹1,974.76 crore on Monday, with August inflows crossing $1.5 billion so far, building on July's $2.1 billion, even as the market continues to digest a still-volatile geopolitical backdrop and a broadly encouraging earnings season.
