Mumbai, Dec 21 (IANS) Concerns over global economic growth and threat of a partial US government shutdown spooked international and local equity indices on Friday, with the BSE Sensex plunging nearly 700 points.
Additionally, the US Fed rate hike's impact on the domestic currency along with profit booking pulled the two main equity indices lower.
However, the declining trend in crude oil prices arrested the sharp correction. The Brent crude oil price further fell to $54 per barrel at the close of market hours from Thursday's $55.48.
Globally, major Asian markets closed on a mixed note, whereas European indices like FTSE 100, DAX and CAC 40 traded in the red.
Index-wise, the 30-scrip Sensex settled at 689.60 points or 1.89 per cent lower at 35,742.07 after touching an intra-day high of 36,483.49 points and a low of 35,694.74 .
Similarly, the NSE's Nifty50 also closed in the red. It lost 197.70 points or 1.81 per cent to finish at 10,754.
"Indian markets are catching up with the fall in the Asian markets. Investors have seen that crude oil prices have stopped falling...so now markets are reacting to the Fed decision and worries regarding the global growth," Deepak Jasani, HDFC Securities' Retail Research Head, told IANS.
According to Geojit Financial Services Head of Research Vinod Nair: "Concerns on global economy growth and threat of partial US government shutdown created headwinds to the domestic market. Rupee also gave up some gains due to volatility in bond yield."
"However, fall in oil prices is expected to provide strength to rupee in the near term. Investors are using this opportunity to book profit after the recent rally. The market direction will turn positive as domestic economic indicators remain healthy."
Rupee lost over 45 paise against the US dollar on Friday, ending at Rs 70.15 from its previous close of 69.70. The decline in the rupee came after it made significant appreciation in the past few sessions.
All the 19 sectors on BSE ended in the red led by heavy selling in finance and banking stocks.
"Market ignored positive news of public sector banks' (PSBs) recapitalisation and selling was seen across sectors," said Essel Mutual Fund CIO Viral Berawala.
The government on Thursday had announced fund infusion of Rs 83,000 crore in PSBs by March, which pushed the PSU Bank Nifty index in the green during the initial trading session.
However, the sector-based index ended in the red -- down 0.52 per cent -- as it succumbed to the overall negative trend in the market.
"Technically, with the Nifty correcting sharply, the short-term trend of the Nifty has turned negative. Further downsides are likely once the immediate support of 10,739 is broken," Jasani said.
"Any pullback rallies could find resistance at 10,850."
Except for NTPC and Coal India, all the stocks on Sensex ended lower.
In contrast, Adani Ports and Wipro lost over 4 per cent each, while Maruti Suzuki, Infosys and TCS lost 3 to 4 per cent on Sensex.
Provisional figures from stock exchanges showed that foreign institutional investors (FIIs) bought shares worth Rs 134.14 crore. Domestic institutional investors (DIIs) lost stocks worth Rs 488.55 crore.
