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Indian stock markets witnessed a sharp fall on Friday as escalating tensions between Israel and Iran, along with a sudden jump in crude oil prices, spooked investor sentiment across global markets. 

Tracking weakness in Asian peers, the benchmark Sensex slipped as much as 1,339 points in early trade, hitting an intra-day low of 80,354.59.

However, it managed to recover partially and closed at 81,118.60, down 573.6 points or 0.7 per cent.

The Nifty index also dropped sharply and ended the day at 24,718.6, down 169.6 points or 0.68 per cent.

"Nifty continued to show weakness on Friday amidst geopolitical tension between Israel & Iran and rising International Crude Oil prices," said Nagaraj Shetti of HDFC Securities.

"The overall chart pattern indicates a formation of a short-term top reversal pattern at 25222 as per the daily timeframe chart. The short-term trend of Nifty is negative, but the medium-term trend remains positive," he added.

Out of the 30 Sensex stocks, shares of ITC, IndusInd Bank, State Bank of India, and HDFC Bank were the top losers, each falling more than 1 per cent.

On the brighter side, Tech Mahindra, TCS, Sun Pharma, and Maruti Suzuki were among the few stocks that managed to end in the green.

The broader market also ended in the red. The Nifty Midcap100 declined by 0.24 per cent, while the Nifty Smallcap100 slipped 0.43 per cent -- indicating widespread selling pressure across segments.

Among sectoral indices, the trend was mixed. Public sector bank and FMCG stocks saw the most pressure, with both Nifty PSU Bank and Nifty FMCG falling over 1 per cent.

Other major sectors such as metal, financial services, auto, energy, pharma, consumer durables and oil & gas also ended lower.

The ongoing geopolitical conflict also led to a spike in crude oil prices. The WTI crude benchmark jumped 8.57 per cent to trade at $73.87 per barrel.

Adding to the nervousness, the volatility index India VIX -- which measures market fear -- jumped 7.6 per cent to 15.08 -- signalling higher uncertainty among traders and investors.

Analysts expect market volatility to remain elevated in the near term as geopolitical developments continue to unfold.

"Market sentiment was notably impacted by heightened geopolitical tensions following Israel’s military strike on Iran, which significantly increased risk aversion among investors," Vinod Nair of Geojit Investments Limited said.