Indian shares fell about 2 per cent on Monday, joining a global sell-off that was fuelled by escalating tensions between Russia and the West over Ukraine, and as banking stocks extended their decline.
The NSE Nifty 50 index fell 2 per cent to 17,029, as of 0434 GMT, while the S&P BSE Sensex dropped 1.9 per cent to 57,023.63. The Nifty volatility index, which indicates the degree of volatility traders expect over the next 30 days in the Nifty50 index, jumped as much as 21.61 per cent.
"The correction in domestic markets is part of the global phenomenon. Foreign institutional investors are selling due to a high inflationary environment, tensions between Russia and Ukraine. That's giving jitters to the market," said Saurabh Jain, assistant vice president at SMC Securities.
Energy and metal prices are on the rise, which is essentially stoking inflationary pressure across the global economy, Jain said.
Investors will be keeping a keen eye on India's January retail inflation data, due out later in the day.
Higher crude oil price is another major macro concern for India and if it remains at $95/barrel levels for an extended period, continuation of the accommodative monetary stance would be difficult, said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
Meanwhile, India's federal investigation agency filed a police complaint against ABG Shipyard Ltd and its promoters accusing it of defrauding lenders of 228.42 billion rupees.
The Nifty banking index fell 2.9 per cent, while the public sector banking index dropped 3.4 per cent.
State-run Life Insurance Corp of India filed draft papers with the market regulator on Sunday to sell 5 per cent of its shares to potentially raise nearly $8 billion, dwarfing the biggest IPO in Asia's third-largest economy by a considerable margin.
Among individual stocks, driller Oil and Natural Gas Corp rose as much as 4.9 per cent as strong crude prices boosted its quarterly profit by seven-fold.
