Equity benchmarks crashed on Friday to extend losses for the third straight session, as investors avoided risky investments driven by fears about global economic growth, underscoring the impact of the expected tighter monetary policy path by major central banks.
The BSE Sensex index slumped 1,020.80 points to end at 58,098.92, and the broader NSE Nifty plunged 302.45 points to 17,327.35.
Among the 30 shares of the Sensex, Power Grid fell 7.93 per cent. Mahindra & Mahindra, State Bank of India, Bajaj Finserv, Bajaj Finance, NTPC, HDFC, and IndusInd Bank were among the other significant laggards.
Only Sun Pharma, Tata Steel, and ITC saw gains.
The selling pressure in the market has led to an erosion of over Rs 4 lakh crore in investors' wealth.
As investors raced to keep up with the US Federal Reserve's interest rate projection, Asian stocks limped toward a fourth consecutive weekly loss on Friday and bonds suffered significant losses.
"Because of Fed's move, lot of money that were coming to emerging markets will head back," Saurabh Jain, Assistant Vice-President for Research at SMC Global Securities, told Reuters.
According to data from Refinitiv Eikon, foreign investors bought net $819 million worth of Indian equities last week before net selling $152 million worth this week as of Thursday.
MSCI's world stock index dropped approximately 12 per cent or so over the last month after Fed Chair Jerome Powell made it clear that bringing down inflation will hurt. On Friday, the index hit its lowest level since mid-2020.
For a second day, losses in companies ranging from natural resources and technology to bank stocks contributed to the sea of red in European bourses, which were on track to enter a bear market alongside Wall Street benchmarks.
"Pretty much anything besides inflation data and central bank policy decisions is just noise at the moment, with the market firmly, and almost solely, focused on how high rates will rise across developed markets, and how long they will remain at those peaks," CaxtonFX chief strategist Michael Brown told Reuters.
"The Fed's message on Wednesday was clear, that rates are going higher than the market was pricing, and policy will remain restrictive for a prolonged time to come, likely throughout 2023 - in that environment, it's almost impossible to be long stocks, or to want to buy Treasuries, hence the sell-off in both is no surprise, and should continue."