Indian equity benchmarks gave up initial gains in a volatile session on Wednesday, dragged by financial, IT and auto stocks, as the mood across global equities turned sour after a promising start. Gains in oil & gas and metal shares, however, helped the headline indices avoid deeper cuts.

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Nervousness persisted among investors on the ongoing Russia-Ukraine war, which completed nearly a month with no sign of de-escalation. The prospect of higher interest rates, days after the Federal Reserve and the Bank of England announced hikes, also dented investor sentiment globally.

Both headline indices finished the day down 0.5 percent. The 30-scrip Sensex index shed 304.5 points to end at 57,684.8, retreating as much as 731.7 points from the highest level of the day. The broader Nifty50 benchmark settled at 17,245.7, down 69.9 points from its previous close.

Among blue-chip stocks, Kotak Mahindra Bank, HDFC, Britannia, Bharti Airtel, Sun Pharma, Maruti Suzuki and Bajaj Auto -- closing between 1.7 percent and 2.6 percent lower -- were the top losers. On the other hand, Divi's, Hindalco, Tata Steel, Dr Reddy's, UPL, ITC and JSW Steel, rising between 0.8 percent and 2.5 percent, rose the most among the 21 gainers in the Nifty50 universe.

The HDFC twins, Infosys, Kotak Mahindra Bank and Bharti Airtel were the biggest drags on both main indices.

"Volatility is back due to inflationary pressures triggered by supply constraints. Consistently rising input costs and falling demand due to the surge in COVID cases in parts of the world, the war and high commodity prices are impacting earnings growth," said Vinod Nair, Head of Research at Geojit Financial Services.

The India VIX -- known in market parlance as the fear index -- rose 3.4 percent to settle at 24.9. Last month, Russia's move to invade Ukraine had sent the gauge soaring to a 20-month peak of almost 34.

Auto stocks took a beating amid rising input costs. The Nifty Auto was the worst hit among the sectoral gauges, falling one percent. Maruti Suzuki, Bajaj Auto, Tata Motors and Hero MotoCorp dropped 1-2 percent.

Tata Steel, JSW Steel, Vedanta and Hindalco led the metal pack higher. The metal index rose 1.2 percent.

Broader markets finished the day on a mixed note. The Nifty Midcap 100 rose 0.6 percent but its smallcap counterpart declined 0.2 percent.

In the midcap and smallcap segments, Lakshmi Machine, Chambal Fertilisers, Dhani Services and Hinduja Global -- sliding around 4-10 percent -- were the top losers. On the flipside, L&T Finance, Suven Pharma, Future Retail and IFB Industries -- jumping 7-16 percent -- were the top gainers.

Overall market breadth was in favour of the bears, with an advance-decline ratio of 2:3 as 823 scrips rose on NSE and 1,210 fell.

Global markets

European shares retreated from initial one-month highs amid lingering worries over the economic fallout of the Ukraine crisis. The pan-European Stoxx 600 index was down 0.2 percent at the last count.

S&P 500 futures were down 0.3 percent, suggesting a weak start ahead on Wall Street. Earlier on Wednesday, Asian equities scaled three-month peaks.

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