MUMBAI: Rising geopolitical tension in the Middle East spooked domestic markets on Thursday with benchmark sensex plummeting 654 points, its biggest daily fall in nearly three months, to close at 27,457.58.

Across-the-board selling on the last day of monthly derivative contracts, sluggish global cues and surge in oil prices also pulled down markets for the seventh straight day.

The NSE Nifty slipped 189 points, or 2.21 per cent, to end at 8,342.15, its weakest level in about ten weeks.

In currency markets, rupee fell to 62.7 levels against the US dollar on capital outflow worries.

Saudi Arabia carried out air strikes against Huthi rebels in Yemen on Thursday. This sparked off a wave of risk aversion in financial markets, traders said.

Domestic participants were seen offloading their long positions in Futures and Options (F&O) segment instead of carrying them forward to the next April series, they added.

In the cash market, selling was broad-based as 11 out of 12 sectoral indices closed lower. Only capital goods index escaped the bloodbath.

On the BSE platform, two stocks fell for every one that rose as 1822 scrips ended in the red while 979 advanced.

"Geopolitical tension in Middle East triggered selling pressure across the globe and domestic benchmarks lost close to two percent on F&O expiry day," said Jayant Manglik, President-retail distribution, Religare Securities.

The benchmark S&P BSE 30-share barometer resumed below 28K-mark and gradually moved down to a low of 27,384.87 before concluding at 27,457.58, a steep fall of 654.25 points or 2.33 per cent. Today's fall was biggest since January 6, 2015 when it had plunged by 854.86 points or 3.07 per cent.

The Sensex has now registered its longest losing string — seven days — in 2015. It has lost 1,280 points in seven days.

Elsewhere in Asia, markets mostly fell in line with an overnight sell-off on Wall Street, after weak US data hinted at ongoing weakness in the world's biggest economy.

European markets were also trading lower with deep cuts of up to two per cent.

