The value of Indian rupee weakened and shares slipped on Friday after the US killed top Iranian commander in an airstrike making oil prices surged and intensifying the geopolitical tensions in the Middle East.
Other Asian markets also collapsed following the news of airstrike by US on Iranian commander Qassem Soleimani, head Iran's elite Quds Force and a top militia leader assassination at Baghdad's International Airport.
India, the world's biggest oil consumer, imports about 80% of its oil needs. The swing in oil prices has decreased the value of Indian rupee by 0.26 per cent to 71.5525 against the dollar.
Ajay Bodke, chief executive of portfolio management services at Prabhudas Lilladher Pvt Ltd, Mumbai said, "Iran will certainly retaliate. Oil price is likely to be on boil. It is bad for large oil importing companies, especially those with large trade and current account deficit like India."
"Risk Aversion would sharply rise. Investors may again find comfort in mega-caps and would dismiss 'risky' small, mid-cap equities."
India's NSE Nifty 50 index, which tracks blue chip equities, went down 0.35 per cent to 12,239.50 by 0425 GMT, while the benchmark S&P BSE Sensex fell 0.28 per cent to 41,512.38
Reliance Industries Ltd- retail and telecom groups; India's largest company by market value, shares in oil refining has fell by 0.7 per cent, concerned of falling margins due to soaring oil prices.
Oil and Natural Gas Corp, state-run oil producer and gas suppliers GAIL gained roughly 2.4 per cent each.
Shares in India's top two airlines also tumbled due to hike in oil prices. InterGlobe Aviation Ltd and Spicejet shed 1.8 per cent and 4.4 per cent respectively.
Asian Paints Ltd, a Nifty 50 component, fell by 1.4 per cent.
Shares in IT services companies, which receive maximum of their revenue from abroad and benefit from weaker rupee, gained. Infosys Ltd and Wipro Ltd climbed up to 1.5 per cent each, while Tata Consultancy Services rose 2.3 per cent.
India's central bank on Thursday announced another simultaneous purchase and sale of government bonds, the third such operation in recent weeks, moves seen as an attempt to bringer longer-term yields lower.