The broader NSE index closed down 0.65% at 11,003.5, while the benchmark BSE index ended 0.70% lower at 37,123.31. The Indian rupee was weaker by 0.88% at 71.52 against the dollar by 1014 GMT.
Oil marketing firm Bharat Petroleum Corporation Ltd closed down 7% and saw its worst session in nearly one year. The stock was the biggest loser on the NSE index.
Auto and finance stocks also contributed to losses, with Mahindra and Mahindra Ltd and State Bank of India sliding 2.6% and 2.4%, respectively.
The attacks knocked out more than 5% of global oil supply, pushing prices to four-month highs and boosting safe-haven bets. A source close to the matter told Reuters the return to full oil capacity could take "weeks, not days."
"If crude stays high at $65-$70 per barrel, it could have repercussions (for the Indian economy)," said Neeraj Dewan, director, Quantum Securities.
"It could impact inflation, rate cuts may not happen. But indications are that the supply should get restored soon."
Indian oil marketing companies Indian Oil Corporation Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd slid between 5% and 7%.
Heavyweight oil-to-retail conglomerate Reliance Industries Ltd was among the top drags, falling as much as 3.22% to its lowest in nearly two weeks.
The Nifty Energy index slumped 2.02%.
Aviation stocks also were also hit by the jump in oil prices, with Indigo-owner Interglobe Aviation Ltd falling 3.8% and Spicejet Ltd sliding 7.98%.
India's finance minister had announced measures on Saturday to revive the housing sector and boost exports as the government tries to kick-start an economy hit by a lending crisis and a slowdown in demand.
The moves, however, failed to cheer investors, with the Nifty Realty index falling as much as 1.10%.
Meanwhile, Bharat Electronics Ltd jumped 4.37% after scoring a 53.57 billion rupee ($749.49 million) contract to procure missile systems for the Indian Air Force.