Equity benchmark indices erased morning gains on Wednesday during volatile trading as tension mounted between India and Pakistan.
Investors hoped the skirmishes along Indo-Pak border will not escalate further. During the day, Pakistani aircraft violated the Indian air space in Jammu and Kashmir, but were intercepted and pushed back by Indian fighter jets.
The Bombay Stock Exchange S&P Sensex was ruling at 36,362 around 11:00 am. It fell sharply by 615 points to 35,747 at 12:13 pm. However, it recovered soon and closed the day 68 points down at 35,905.
At the National Stock Exchange, the Nifty 50 closed 29 points in the negative at 10,807.
Among the prominent losers were Wipro, Infratel, Vedanta, Bharat Petroleum Corporation Limited and Tata Motors.
Traders said if geo-political tensions rise in coming days, the uncertainty in stock markets could linger on. Bank, infrastructure, metal and auto scrips may be hit in case negative sentiments prevail.
Meanwhile, Asian markets were mixed as the heightened geo-political risks added another layer of caution. Also, investors waited to see if the United States and China can clinch a trade deal on tariffs.
Market experts were also keeping an eye on the US-North Korean summit beginning in Hanoi later on Wednesday. The United States is pushing North Korea to dismantle its nuclear weapons programme.