New Delhi [India], March 2 (ANI): Indian stock indices settled in the red, but recovered substantially from the early losses on Monday, amid escalating tensions in West Asia.

Sensex closed at 80,238.85 points, down 1,048.34 points or 1.29 per cent, while Nifty closed at 24,865.70 points, down 312.95 points or 1.24 per cent.

'The India VIX has edged higher, signalling increased uncertainty and risk aversion among market participants,' said Vinod Nair, Head of Research, Geojit Investments Limited.

At closing today, India VIX, which indicates volatility in the markets, were whopping 25 per cent up. Volatility Index is a measure of the market's expectation of volatility over the near term. Volatility is often described as the 'rate and magnitude of changes in prices', and in finance often referred to as risk.

'Rising geopolitical tensions in the Middle East have unsettled global markets, with concerns over the possible extension of the situation given the killing of Iran's supreme leader. Rising crude oil prices and a weakening INR reflect concerns over potential disruptions to oil supply, which could increase inflationary pressures in India and impact fiscals and strain margins for energy and chemical-dependent sectors,' Nair said. 'Investors are rotating toward traditional safe-haven assets and adopting a cautious stance, awaiting greater clarity. While FII selling has intensified after the spiking of crude prices.'

Shrikant Chouhan, Head Equity Research, Kotak Securities, said the current market texture is weak but oversold. 'Hence, a technical bounce-back from the current level is not ruled out.'

Crude oil prices globally also spiked today. At the time of filing this report, WTI crude futures were 7.5 per cent higher at USD 72 per barrel.

'Developments in the Middle East could increase pricing and procurement risks for crude oil and Liquefied Natural Gas (LNG), posing substantial challenges for India, which has more than 85% and 50% import dependency, respectively, in these items,' said Sehul Bhatt, Director, Crisil Intelligence.

Sumit Pokharna, VP, Fundamental Research, Kotak Securities, said that amid escalating tensions involving the United States, Israel, and Iran, Brent crude prices are expected to remain elevated in the near term. (ANI)