Equity benchmarks Sensex and Nifty on Thursday gave up all early gains to settle lower as surging oil prices amid the ongoing conflict between Russia and Ukraine hit investor sentiment.

The 30-share BSE Sensex started the trade on a higher note and jumped 527.72 points in morning deals to a high of 55,996.62. However, during the afternoon trade it surrendered all its early gains and finished at 55,102.68, lower by 366.22 points or 0.66 per cent.

In similar fashion, the broader NSE Nifty declined 107.90 points or 0.65 per cent to close at 16,498.05.

"Domestic equity markets closed lower as the geopolitical scenario continue to worsen due to the Russia-Ukraine crisis. Soaring crude prices due to supply disruptions from Russian sanctions have further escalated the situation," according to Mitul Shah, Head Of Research at Reliance Securities.

UltraTech Cement was the biggest drag in the Sensex pack, tumbling over 6 per cent, followed by Asian Paints, Dr Reddy's Laboratories, Maruti Suzuki India, Hindustan Unilever Limited and ICICI Bank.

In contrast, PowerGrid, Wipro, Tech Mahindra, HCL Technologies Limited and ITC were among the prominent gainers.

International oil benchmark Brent crude surged 2.75 per cent to USD 116.03 per barrel.

Bourses in Hong Kong and Tokyo settled with gains, while Shanghai was marginally lower.

Stock exchanges in the US closed in the positive territory in the overnight session.

Foreign institutional investors continued their selling spree in Indian markets as they offloaded shares worth Rs 4,338.94 crore on a net basis on Wednesday, as per exchange data.