Market benchmark Sensex plunged by 465.28 points points to 27,827.53, its biggest single-day fall in nearly three months, whereas Nifty nosedives 153.90 points to 8,591.25.
Earlier in the day, Sensex fell over 555 points after the Indian army on 29 September announced that it conducted 8 surgical strikes on terror launch pads at the Line of Control (LoC).
Nifty went down about 170 pts in noon trade after reports of surgical strikes against Pakistan. About 1718 shares declined against 734 advancing shares on the BSE.
Most of the 30-Sensex constituents led by Adani Ports, ICICI Bank, Axis Bank, Lupin, Tata Motors, Sun Pharma, Tata Steel, GAIL, SBI, NTPC, Dr Reddy's, Larsen and Toubro and Asian Paints were trading in the negative terrain, falling by up to 4.75%.
The Director General Military Operations (DGMO), Lt Gen Ranbir Singh, said in a press briefing that India conducted surgical strikes last night across the LoC to "safeguard our nation".
This triggered all-round selling in the stock market.
However, in the first half of the day Sensex surged over 181 points and the NSE Nifty reclaimed the 8,800-mark after global markets cheered a surprise deal by OPEC to cut oil production for the first time in eight years.
The NSE index Nifty was also trading higher 55.50 points, or 0.63%, at 8,800.65.