The Indian stock market indices closed sharply lower, declining over 2% on Thursday, weighed down by investor concerns over escalating geopolitical tensions and the resulting rise in crude oil prices.

The surge in Chinese stock markets, following the announcement of Beijing's economic stimulus packages, also led to a shift in foreign investment flows.

The BSE Sensex was down 1,769.2 points or 2.1 percent at 82,497.10, and the Nifty 50 was down 529.90 points or 2.05 percent at 25,267.00.

The sell-off reflected on both broad market indices and the sectoral indices with all sectors crossing in red. Nifty realty being the major loser with the index falling over 4.30% followed by other heavy weights bank, auto, financial services oil and gas segments that lost over 2%. All broad market indices fell over two percent.

The market volatility index jumped over 15.26% depicting the fear factor among the investors. The market breadth was negative, with 2,912 stocks traded, out of which 637 advanced, 2,200 declined, and 75 remained unchanged.

JSW Steel and ONGC were the top movers on NSE who gained 1.33% and 0.36% respectively, while BPCL lost 5% and Sriram Finance and LT lost over 4%. AXIS Bank and Reliance also lost nearly 4% on Thursday.

Investors saw a loss of Rs 9.7 trillion in market capitalisation on the Bombay Stock Exchange (BSE). By Thursday's close, the total market capitalisation had dropped from Rs 474 trillion on Tuesday to around Rs 465 trillion. During intraday trading, losses were even higher, reaching Rs 10.56 trillion as the market cap briefly fell to Rs 464 trillion.

Investors are concerned over the mounting tension in Middle east with Iran missile strikes in Israel and Israels probable retaliations in the region that could lead to disruption in the oil supply. Any such disruption will lead to a surge in the crude prices and adversely effect countries like India who are heavily depended on crude imports.

Apart from this foreign investment has shifted to the Chinese markets, which are currently bullish following stimulus measures introduced by the Chinese central bank to revive the economy. Compounding concerns are the recent taxation and transaction charges introduced by SEBI on Indian stock markets, which could potentially reduce F&O and derivatives trading volumes.

Elsewhere in Asia, Nikkei 225 in Japan closedupabout 2%, Hong Kong's HangSeng was down by 1.47% and Kospi of South Korea closed down by 1.22%. Theblue-chip index of China surged over 8% so was SSE composite index.