Stock markets had opened on a strong note with the 30-scrip Sensex touching a high of 25,548.33 points in early trade on better-than-expected results from IT major Infosys.
However, lingering concerns over Eurozone debt resurfaced as reports said Portugal's biggest listed bank missed debt payments, triggering a sell-off, brokers said.
As a result, the BSE Sensex dipped below the 25,000 mark to touch day's low of 24,978.33 on across-the-board profit booking by participants. The barometer closed with a hefty fall of 348.40 points, or 1.37 per cent, at 25,024.35. The gauge has now shed 1,075.73 points in four straight sessions.
For the week, Sensex has fallen by about 3.61 per cent or 937.71 points - its sharpest weekly loss since December 2011.
Strong selling pressure was seen in sectors like realty, oil & gas, power, capital goods and PSU stocks that had outperformed in the run up to the Union Budget, brokers said.
"Markets are disappointed on the fiscal consolidation front. Budget didn't speak anything about rationalization of subsidies which was widely expected by most market players," said Rakesh Goyal, Sr. Vice President, Bonanza Portfolio.
The 50-share Nifty of the National Stock Exchange slipped below the crucial 7,500 mark by losing 108.15 points, or 1.43 per cent, to settle at 7,459.60.
During the session, Nifty shuttled between 7,625.85 and 7,447.20. For the week, Nifty lost about 3.8 per cent -- its biggest weekly loss in nearly 16 months.
Fears over the health of Portugal's largest listed bank, Banco Espirito Santo, rattled stock markets in Europe and across the Atlantic, said fund managers.
Investors have also been seen booking profits since the Indian market climbed to all-time highs. Caution prevailed ahead of IIP data for May this evening.
Major Sensex losers include Hindalco Industries, SBI, Axis Bank, ICICI Bank, RIL, ONGC, GAIL India, L&T and NTPC.
Sectorally, the BSE Realty sector index suffered the most losing 5.16 per cent, followed by Capital Goods 4.75 per cent, Power index 4.54 per cent and Metal index 3.69 per cent.
* BSE index falls 1.37 pct; NSE ends 1.43 pct lower
* All BSE indexes barring defensives end in red
* NSE bank index slumps 2.5 pct as bond yields surge
India's BSE index posts biggest weekly loss in over 2-1/2 years
(Reuters) - India's BSE index fell 1.4 percent on Friday and posted its biggest weekly loss since December 2011 as blue chips such as Reliance Industries were hit by a range of factors including profit-taking and disappointment over the budget's lack of specifics.
Shares had surged to a string of record highs since last week ahead of the federal budget on Thursday, but investors said the government had not spelled out its action on a range of issues, especially in terms of reducing subsidies.
Sentiment was also dampened by concerns about Portugal's banking sector that highlighted contagion risk in the euro zone.
All BSE indexes ended in the red except for those in defensive sectors like IT, FMCG and healthcare, sending the benchmark down 3.6 percent for the week, its biggest weekly fall since a 4.45 percent fall in December 2011.
With budget out of the way, traders say the focus would shift to global markets, progress on monsoon, and earnings next week.
"Near-term valuations were looking stretched. Now, perspective would be drawn from what will happen from the budget speech and in global markets," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.
"Also, revenue growth estimates of the government in the budget look tad optimistic given the economy is yet to recover."
The benchmark BSE index lost 1.37 percent, or 348.40 points, to end at 25,024.35. The broader NSE index fell 1.43 percent, or 108.15 points, to end at 7,459.60, closing below the psychologically important 7,500 level. It fell 3.76 percent for the week, matching its worst weekly fall in March 2013.
Among blue chips, Housing Development Finance Corp fell 3.3 percent while Reliance Industries was down 3.1 percent.
The BSE capital goods index slumped 4.8 percent. Larsen & Toubro lost 4.9 percent while Bharat Heavy Electricals slumped 8.4 percent.
Banks also fell on potential losses on bond portfolios after the 10-year yield hit its highest level since May 21.
The NSE sub-index for banks slumped 2.5 percent. State Bank of India fell 4.7 percent while HDFC Bank lost 1.4 percent.
IDFC, which is seen as one of the biggest beneficiaries from the budget, also fell 2 percent on profit-taking after rising 8.7 percent in the previous session.
However, defensives gained on some churning from high-beta stocks amid heavy falls. ITC rose 1.1 percent while Sun Pharmaceutical Industries gained 2.5 percent. Software stocks gained after Infosys Ltd, India's second-largest software services exporter, posted a 21.6 percent increase in quarterly net profit, beating estimates. Infosys shares gained 1 percent, Tata Consultancy Services rose 1.8 percent, Wipro ended up 1.5 percent, HCL Technologies advanced 2 percent, and Tech Mahindra ended 1.4 percent higher.
FACTORS TO WATCH
* Euro steadies after dip on Portuguese bank nerves
* Oil heads for 3rd weekly loss, Brent stays above $108
* European markets settle after Portugal-led rout