Equity benchmarks wilted under selling pressure on Friday as the steady stream of grim news surrounding the Covid-19 crisis in the country sapped risk appetite and raised concerns over the economic recovery forecasts.
A depreciating rupee, which slumped below the 75-mark versus the US dollar, and a negative trend in global equities added to the gloom, analysts said.
After a volatile session, the 30-share BSE Sensex ended 202.22 points or 0.42 per cent lower at 47,878.45.
Similarly, the broader NSE Nifty dropped 64.80 points or 0.45 per cent to close at 14,341.35.
M&M was the top loser among the Sensex constituents, skidding 2.63 per cent, followed by Dr Reddy’s, Tech Mahindra, HUL, Bharti Airtel, ICICI Bank, Titan and Infosys.
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On the other hand, PowerGrid, NTPC, Axis Bank, IndusInd Bank, HDFC and Bajaj Finserv were among the gainers, climbing up to 3.51 per cent.
During the holiday-truncated week, the Sensex slumped 953.58 points or 1.95 per cent, while the Nifty tanked 276.50 points or 1.89 per cent.
According to Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities, Indian markets succumbed to FPI selling this week on account of the sharp rise in Covid-19 cases. FPIs have remained net sellers this week with the rupee sustaining at 75 levels against the USD.
"As India has become the epicentre of the virus resurgence, there is fear of potential earnings downgrades which could turn out to be higher in case of mid and small caps vis-à-vis the large caps.
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"Fresh lockdowns and restrictions being imposed by various state governments will impact demand and also business activity. The persistent rise in hard commodity prices is a threat which could weigh on margins of many manufacturing companies. Too many potential negatives have come together which could impact markets in the very near future," he said.
India added a record over 3.32 lakh new coronavirus cases in a single day, taking the country's tally to 1,62,63,695, while active cases crossed the 24-lakh mark, according to the Union Health Ministry data updated on Friday.
Amid several states flagging scarcity of medical oxygen in the Covid-19 fight, Prime Minister Narendra Modi on Friday said Railways and Air Force are being deployed to reduce the transportation time for oxygen tankers and all state governments need to work together to meet requirements of life-saving gas and medicines.
Sectorally, BSE telecom, realty, teck, FMCG, IT and basic materials indices lost as much as 1.33 per cent, while power, utilities and finance ended with gains.
In the broader markets, the BSE midcap and small-cap indices outperformed the benchmarks, rising up to 0.51 per cent.
On the global markets front, Wall Street tanked after US President Joe Biden unveiled a plan to hike taxes for the wealthiest Americans, including almost doubling the capital gains tax.
In Asia, bourses in Shanghai, Hong Kong and Seoul ended on a positive note, while Tokyo was in the red.
Stock exchanges in Europe were trading with losses in mid-session deals.
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Meanwhile, international oil benchmark Brent crude was trading 0.06 per cent lower at USD 65.36 per barrel.
The rupee fell by 7 paise to close at 75.01 against the US dollar on Friday as a record spike in COVID-19 cases weighed on investor sentiment.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they pulled out Rs 909.56 crore on Thursday, according to the provisional data.
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