Syria strikes: Sensex plunges 221 pts, Nifty drops below 9,200-mark

RBI's warning about higher inflation also weighed in on the investors

Indian markets posted their biggest single day drop in nearly two weeks after US missile strikes against Syria spooked investors. The move triggered a risk off sentiment among global investors with stocks slipping and gold and bonds inching up on safe haven buying. Indian markets, however, were among the worst-performing global market on Friday with the benchmark Sensex and Nifty both dropping 0.7 per cent each. Market players said the global developments triggered profit-booking in stocks that had seen sharp gains in recent weeks amid fears of earnings disappointment. Reliance Industries dropped 2.3 per cent, Tata Steel fell nearly two per cent, while ICICI Bank and State Bank of India (SBI) fell over a per cent each. The NSE VIX index, a gauge for market volatility, rose nearly four per cent.

On Friday, foreign institutional investors (FIIs) sold shares worth around Rs 260 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 415 crore.

Despite, the FII selling, the rupee ended at a 20-month high against the US dollar, gaining 23 paisa to end at 64.28. The gains in the rupee come a day after the Reserve Bank of India (RBI) expressed concerns over inflation, signaling there could no rate cuts in 2017.

"Unpleasant geopolitical developments are never good for markets and economies," Sanjay Sinha, founder Citrus Advisors. Investors will "wait and watch" for reactions from countries related to the Syria civil unrest over the next few days before "acting decisively," he said.

Telecom stocks Bharti Airtel and Idea rallied nearly a per cent each after the telecommunications regulator asked rival Reliance Jio Infocomm to withdraw a promotional offer. Experts said end of Jio's promotional offer will ease pricing pressure on the industry. Meanwhile, aviation stocks fell after the US strikes trigged a jump in crude oil prices. InterGlobe Aviation fell 1.1 per cent, Jet Airways dropped 4.5 per cent and SpiceJet declined 6.1 per cent. Oil futures in New York and London surged more than two per cent to the highest in a month and traded near $53 a barrel.

"Whether the market reaction is temporary or will continue will depend on the reactions from the international community. We can't see that at the moment so it's hard to digest," said Ayako Sera, market strategist, Sumitomo Mitsui Trust Bank.