Rice is a major staple food crop all over the world. Recent climate change trends forecast an increase in drought severity, necessitating the creation of novel drought-tolerant rice cultivars in order to continue rice production in this ecosystem. This study was carried out at the experimental farm of the rice research and training center (RRTC) using the randomized complete block design (RCBD) to assess the impact of water scarcity on eight rice varieties by identifying differences in physiological and biochemical responses among drought-sensitive and resistant rice varieties, in addition applying two PCR-based molecular marker systems ISSR and SCoT to assess the genetic diversity among the studied rice varieties. The results revealed that, Water shortage stress significantly reduced relative water content, total chlorophyll content, grain yield, and yield characteristics. while, it significantly raised proline content and antioxidant enzyme activity (CAT, APX, and SOD). The combined analysis of variance demonstrated that the mean squares for environments, varieties, and their interaction were highly significant for all investigated traits, suggesting that the germplasm used in the study had significant genetic diversity from one environment (normal irrigation) to another (water deficit) and could rank differently in both of them. Mean performance data showed that, Puebla and Hispagran varieties were selected as the most favourable varieties for most physiological and biochemical parameters studied, as well as yield traits which recorded the highest desirable values under both irrigation treatments. They were recommended for use in rice hybrid breeding programmes for water scarcity tolerance. Genetic Similarity and Cluster Analysis revealed that, the both molecular markers exhibited comparable genetic diversity values but a higher level of polymorphism was represented by ISSR. This indicates the high efficiency of both markers in discriminating the tested varieties. The dendrogram generated by ISSR and SCoT markers combined data divided the varieties into two major clusters. Cluster I consisted of the genotype Sakha 106. Cluster II retained seven varieties, which were further divided into two sub-clusters; Sakha 101, Sakha 105, Sakha 106, Sakha 107 constituted the first subgroup, while Giza 177, Hispagran, and Puebla formed the second one.