- Sensex, Nifty close nearly 2% lower tracking global markets
- Potential government shutdown, rate hikes in US hurt world markets
- On a weekly basis, Sensex shed 220 points, Nifty fell 51.45 points
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The S&P BSE Sensex sank as much as 736.93 points to 35,694.74 at the day's lowest point, while the Nifty50 fell 213.05 points to register an intraday low of 10,738.65.
Forty five out of the 50 stocks on the Nifty finished the session lower.
Prominent laggards on the index included Indian Oil (-5.44 per cent), Maruti Suzuki India (-3.43 per cent), UPL (-4.55 per cent) and Adani Ports (-3.71 per cent).
Analysts pointed at a global selloff triggered by fears of a potential US government shutdown and further rate hikes by the Federal Reserve next year.
"After showing strength in the past few days despite weak global cues, domestic markets finally succumbed to negative cues of global slowdown, increased US borrowing costs and US-China trade wars," said Viral Berawala, CIO, Essel Mutual Fund.
US President Donald Trump refused to sign legislation to fund the US government unless he got money for a border wall, thus risking a partial federal shutdown on Saturday. Sentiment had also turned sour on Thursday when the US central bank largely retained plans to increase interest rates despite mounting risks to growth.
"Though India macro continues to turn for the good with lower crude, foreign institutional investors (FII) selling continued to be a major overhang on the market. Market ignored positive news of PSU Bank recapitalisation and selling was seen across sectors," Mr Berawala said.
On a net basis, foreign portfolio investors (FPIs) sold shares worth Rs 386.44 crore Thursday, and domestic institutional investors (DIIs) were net buyers to the tune of Rs 87.96 crore, provisional data available with BSE showed, according to news agency Press Trust of India.
The rupee, meanwhile, fell 52 paise to 70.22 against the US dollar on Friday.
The 30-scrip index ended the week with a loss of 220.86 points, while the broader Nifty declined 51.45 points. (With inputs from agencies)