Benchmark indices slumped in trade, with the Nifty and the Sensex falling sharply, as Iran launched multiple missiles against at least two U.S. air bases in Iraq.
Dow Futures too were pointing sharply lower with a drop of more than 300 points likely. The Sensex was seen trading lower by 312 points, while the Nifty was down 102 points.
Crude oil prices surged in trade by a huge 4 per cent, and analysts warn that it could rally even further. If crude oil prices rally, it could hit India badly, especially the deficit numbers and also inflation, at a time when there is already an economic slowdown.
"All is well! Missiles launched from Iran at two military bases located in Iraq," Trump tweeted. "Assessment of casualties & damages taking place now. So far, so good! We have the most powerful and well equipped military anywhere in the world, by far! I will be making a statement tomorrow morning," US President Donald Trump said.
Heavyweight stocks like Reliance Industries, HDFC and HDFC Bank saw a serious knock. Shares in Yes Bank gained on reports that the board would meet on Jan 10, to consider fund raising.
Shares in HCC fell after reports that the company had defaulted in payment of interest and principal amounts.
Meanwhile, most Asian markets slumped with the Japanese Nikkei losing almost 2 per cent, while the Hong Kong's Hang Sang and Korean Kopsi were also lower.