Benchmark indices Sensex and Nifty opened sharply lower on September 11 amid heightened global risk aversion, with rising crude oil prices and continued foreign institutional selling weighing on domestic equities.

At 9:15 am, the Sensex was down 707.72 points or 0.94 percent at 74,194.87, while the Nifty declined 237 points or 1.01 percent to 23,240.80. Market breadth was weak, with 749 shares advancing against 1,197 declining and 137 remaining unchanged.

Fifteen of the 16 major sectors traded lower, while the broader midcap and smallcap indices declined around 1.1 percent each.

The sharp rise in crude oil prices emerged as the key pressure point for Indian equities. Brent crude rose to around $108 a barrel as the escalation of the Middle East conflict increased concerns over disruptions to key shipping routes. Brent crude futures were at $107.87 a barrel at 8:19 IST and had gained around 12 percent over the past week.

The widening conflict has raised risks to shipping through the Red Sea, while disruptions around the Strait of Hormuz have added to concerns over global energy supplies. Higher crude prices are particularly negative for India because the country imports a large share of its energy requirements, potentially increasing the import bill, inflationary pressures and pressure on corporate margins.

Ponmudi R, CEO of Enrich Money, said the sharp increase in crude prices is likely to heighten concerns over India's import bill, inflation and corporate margins, keeping risk appetite subdued.

The rise in oil prices has also coincided with higher US Treasury yields. The benchmark 10 year US Treasury yield rose 0.104 percentage points to 4.943 percent on Thursday, its highest level since October 2023. Higher US yields can reduce the attractiveness of emerging-market assets and add pressure to foreign flows into Indian equities.

Foreign institutional investors remained net sellers on September 10, offloading Indian equities worth Rs 438 crore. Domestic institutional investors provided some support, recording net purchases of Rs 1,026 crore, but the buying was insufficient to offset the broader negative sentiment.

Technical factors also added to the cautious outlook. Analysts said the Nifty needs to reclaim the 23,450 to 23,500 zone for bullish momentum to return.

Gaurav Udani, Founder of Thincredblu Securities, said traders should avoid chasing shorts immediately after the sharp gap-down opening but maintain a negative bias and consider a sell-on-rise strategy if the index fails to reclaim the 23,500 to 23,600 zone. He highlighted 23,300 as an important near-term level, with a sustained break below it potentially leading to further weakness, while holding the level could trigger short-covering and a technical recovery.

With crude prices, global bond yields and foreign flows emerging as key pressure points, market participants are likely to closely track geopolitical developments and price action around the Nifty's 23,300 and 23,500 levels.