Indian shares fell on Monday as escalating US-Iran tensions spiked crude, pulling the rupee lower and stoking fears of a higher import bill for the world's third biggest oil consumer.
The NSE Nifty 50 index fell just over 2%, recording its worst intraday fall since September 3 and hitting its lowest in nearly four weeks.
The Nifty 50 ended 1.91% lower at 11,993.05, while the benchmark S&P BSE Sensex closed down 1.9% at 40,676.63. The rupee was 0.3% weaker at 72.03 against the dollar.
Oil prices rose a further 2% on Monday, extending Friday's gains, as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after U.S. air strikes killed a top Iranian general.
The escalating Middle East conflict is causing concerns of disruptions to oil supplies in a region that accounts for nearly half of the world's total production.
Rising crude prices could widen India's current account deficit and fiscal deficit as Asia's third-biggest economy spends more on oil imports, said Rusmik Oza, head of fundamental research at Kotak Securities Ltd in Mumbai.
"The geopolitical tension has increased the risk of unknowns, which is getting factored into the market," he said.
The Nifty PSU bank index, which tracks state-run banks, fell 4.34%, with top lender State Bank of India down 4.41% at its worst closing level in nearly four weeks.
Non-banking finance firm Bajaj Finance Ltd closed down 4.7% and was the biggest loser on the Nifty 50.
However, Titan Company Ltd was a bright spot among Indian equities, closing up 1.7%, after reporting jewellery division sales that met the company's revised expectations on the back of the wedding season.
