On Thursday, the US markets cracked after Argentina announced that it had defaulted on its debt. The Dow Jones closed 1.88% lower, while Nasdaq ended 2.09% lower on Thursday.
Experts say Indian stock markets are looking for concrete policy measures from the new government. "Earlier we were seeing re-rating in anticipation of policy decisions. Now, markets want government to deliver," said Gaurav Mehta, VP, institutional equities, Ambit capital. He added that apart from global cues, Friday's fall could be attributed to the continued underperformance seen in broader markets and increased supply due to rising number of QIPs. "While we are still in a market, the current correction could take Nifty till 7,100," he said.
The Sensex after opening lower at 25,753.92, dipped to 25,459.13 on across-the-board selling. It ended at 25,480.84, down 414.13 points, or 1.60 per cent -- its biggest fall since July 8 when it tanked 518 points after railway budget.
The BSE barometer had lost 192.45 points yesterday.
The Sensex finished the week with a loss of 646 points, snapping two weeks of successive gains.
With dollar gaining strength against most global peers, the rupee breached the 61-mark to trade at over three-month low of 61.17 (intra-day). After US Fed trimmed monthly stimulus, fears have heightened that inflows into emerging markets would slow. All eyes are on a US non-farm payroll report to be released later today for more cues, said brokers.
Meanwhile, the 50-share NSE Nifty dipped below 7,600 mark by plunging 118.70 points, or 1.54 per cent, to end at 7,602.60. Intra-day, it shuttled between 7,716.70 and 7,593.90 intra-day.
"Markets sold off in the second half of the day to close 1.5 per cent lower. Weak global markets and continuing geo-political tensions rode over the positive core sector growth data released in India yesterday," said Dipen Shah, Head- Private Client Group Research, Kotak Securities.
European indices were trading 1-2 per cent lower. Asian markets closed up to 1 per cent down as global sell-off spread.
"Lower inflation in EU, expectations of earlier than expected rise in US interest rates, default by Argentina and some lower-than-expected quarterly results in India soured sentiments," he added.
There was also continued profit-booking in recent out-performers such as oil and gas, metal, power, capital goods and banking, PSUs, realty and consumer durable stocks.
Out of the 30-share Sensex, 25 stocks closed with losses led by RIL and ONGC. Just five counters ended higher.
Sectorally, the BSE Consumer Durables sector index suffered the most today by plunging 3.27 per cent, followed by Oil and Gas (2.16 per cent), Metal (1.90 per cent), Capital Goods (1.90 per cent) and Power (1.87 per cent), among others.
Meanwhile, Foreign Portfolio Investors sold shares worth a net Rs 1,654.86 crore yesterday, as per provisional data.
Indian shares slump most in 3-1/2 weeks; positive data ignored
(Reuters) India's NSE index fell 1.5 percent on Friday, marking its biggest single-day fall in nearly 3-1/2 weeks as blue-chips such as Reliance Industries slumped tracking weaker global markets ahead of U.S. jobs data later in the session.
While encouraging for the global economy at large, strong U.S. employment data would strengthen the case for an early interest rate hike by the Fed, whose monetary largesse has helped fuel a 45 percent rally in global stocks over the past two years.
This caution was magnified in India after overseas investors sold shares worth 16.54 billion rupees ($273.2 million) on Thursday, their biggest single-day selling since July 2, according to provisional exchange data.
Markets virtually ignored a private survey on Friday showing factory activity expanded at its fastest pace in 17 months in July and data late on Thursday showing annual infrastructure sector growth hit a nine-month high in June.
Caution ahead of the Reserve Bank of India's policy review on Tuesday, its first since the new government's budget, where it is expected to leave its key interest rate unchanged, weighed as well.
"Global risk is weighing but India remains on an uptrend. Expectations for at least a dovish stance by RBI have also grown, so buy on dips," said Deven Choksey, managing director at K R Choksey Securities.
The broader NSE index closed 1.54 percent, or 118.70 points, lower at 7,602.60 after going below the psychologically important 7,600 level during the day.
The benchmark BSE index lost 1.6 percent, or 414.13 points, to end at 25,480.84.
Both the indexes marked their biggest single-day fall since July 8, retreating from the record highs hit last week.
Blue-chips led the fall with Reliance Industries down 3 percent and Housing Development Finance Corp lower 2.7 percent.
Cigarette maker ITC fell 1.8 percent, while HDFC Bank ended down 2.2 percent.
Among other blue-chips, Tata Motors fell 1.5 percent and Sun Pharmaceutical Industries lost 2.8 percent.
Tech Mahindra Ltd ended down 1.1 percent after April-June-quarter net profit lagged estimates.
Pantaloons Fashion & Retail Ltd slumped 10.1 percent after posting a wider net loss for the June quarter.
However, among stocks that gained, Maruti Suzuki India rose 2.5 percent after July sales beat analyst expectations.
FACTORS TO WATCH
* Dollar just off 10-month high before U.S. jobs data
* Oil slips below $106 on oversupply, weak demand
* Asia stocks sideswiped by Wall St; China motors on