The victory was the fourth ATP Masters 1000 trophy for Alcaraz.
Despite coming into the finals with a dominating 7-0 lead over the 23-year-old Indonesian, Sindhu looked a pale shadow of her old self as an opportunity to seal her first crown in eight months slipped out of her hands.
The Olympic medallist defeated Singapore's Yeo Jia Min in straight games.
Sindhu won 21-14, 21-17 against Denmark's Mia Blichfeldt.
A tough contest awaits Srikanth as he is pitted against top seed Kenta Nishimoto of Japan in the quarterfinals.
The ace singles players won their respective first round games in Madrid on Wednesday.
The 19-year-old is the youngest player since start of the ATP Tour in 1990 to defeat three top-five players at the same event.
Alcaraz became the first player to beat Rafael Nadal and Djokovic at the same clay court event.
Three-time major winner Murray was set to face Djokovic for the 37th time in a highly anticipated clash on clay at the ATP Masters 1000 event in the Spanish capital.
The tournament will now take place on the Tennis World Tour videogame and run from April 27 to 30.