The Sensex and the Nifty closed lower for a third straight session on April 16, tracking weakness in global markets amid a worsening situation in West Asia. Rising US treasury bond yields, which shot to a five-month high, also weighed on investors' risk appetite.

Analysts advise investors to adopt caution and wait and watch to see how the developments unfold.

At close, the Sensex was down 456.10 points or 0.62 percent at 72,943.68, while the Nifty 50 fell 124.60 points or 0.56 percent at 22,147.90. About 2,037 shares advanced, 1,255 shares declined, and 86 shares remained unchanged.

"Going ahead, we expect current decline to extend towards next key support of 21900, as a part of retracement of past one month rally, followed by a base formation amid stock specific action as earnings season accelerated," analysts at ICICI Securities said. Meanwhile, Nifty 50 is expected to face resistance at 22,800, they added.

Rising bond yields may prevent the US Federal Reserve from cutting rates this year, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out in a note.

"The Israel-Iran crisis weighed on investor sentiment, dampening risk appetite. Investors are also closely monitoring the March quarter results domestically," Mandar Bhojane, Research Analyst at Choice Broking said in a note.

The broader market, however, managed to remain above water, with the BSE Smallcap gaining 0.6 percent and BSE Midcap closing flat.

Nifty IT and Nifty Financial Services were the biggest laggards amongst the sectoral indices. While Nifty IT fell 2.6 percent, Nifty PSU Bank shed 1.3 percent.

On the other hand, Nifty Pharma and Nifty FMCG ended 0.4 percent higher, emerging as the top gainers amongst sectoral indices.