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Nifty declined on Monday as fear of a wider conflict rose between Israel and Hamas. At close, Nifty was down 0.72 per cent or 141.2 points at 19512.4, said Deepak Jasani, Head of Retail Research at HDFC Securities.

Volumes on the NSE were the lowest in many weeks. Broad market indices fell more than the Nifty even as the advance decline ratio fell sharply to 0.28:1.

European and Asian stocks came under pressure on Monday in a global risk-off move following the eruption of a growing conflict between Israel and the Palestinian Islamist group Hamas.

This pushed investors towards safe-haven assets as this negative trigger is the latest in the list, including the macro-economic uncertainties in Europe and China, hawkish central banks and already rising oil prices, Jasani said.

Vinod Nair, Head of Research at Geojit Financial Services, said an unforeseen escalation in the Middle East has rekindled pessimism in global markets. Moreover, the rapid surge in oil prices presents a significant threat to the global market, which is already dealing with elevated inflation and interest rates.

"In the mid and small-cap segments, we observe consolidation as investors reshuffle their portfolios due to premium valuations in this space," he said.

Among sectors, financials and consumer discretionary sectors notably underperformed, primarily due to concerns regarding earnings vulnerability if inflation continues to rise.

Conversely, the IT sector is displaying signs of returning to normalcy. While consensus estimates for Q2FY24 remain positive, it's important to note that geopolitical tensions could potentially disrupt this optimistic outlook, he said.