The market came under heavy selling for the second straight day on Friday as sentiments were hit by slowing growth outlook and disappointment over the RBI not cutting rates.
Concerns over the fiscal deficit and a weakening rupee also dampened the mood.
The Sensex fell 334.44 points or 0.82 per cent to settle at 40,445, while Nifty shed 96.90 points or 0.81 per cent to close at 11,921.50.
On a weekly basis, the Sensex dropped 348.66 points or 0.85 per cent; while the Nifty lost 134.55 points or 1.11 per cent.
“Investors were taken aback by RBI’s decision to put a pause on the rate cut spree. In the past, RBI had cut interest rates for 5 consecutive times and this could have been the sixth, but cut did not happen. This indicates that there is little room for monetary easing after full year of rate cuts. Going forward RBI too has moved to wait and watch mode to see how the economy moves,” Jimeet Modi, Founder & CEO, Samco Securities.
Yes Bank was the biggest laggard in the Sensex pack on Friday, falling 9.82 per cent after Moody's Investors Service downgraded the lender's ratings. Other major losers were SBI, IndusInd Bank, Tata Motors, M&M and HDFC, tumbling up to 4.89 per cent.
Sectorally, BSE auto index suffered the most by losing over 1.80 per cent, followed by finance, utilities, realty and Bankex.
Telecom index was the sole gainer on the chart.
Vodafone Idea shares crashed about 9 per cent over Kumar Mangalam Birla statement that the telco "will have to shut shop" in the absence of government relief.
“Nifty in the last session broke below the important support of 12000 and closed below it. Index also closed below its short term moving average and momentum indicators are weakening. The market breadth was also negative. Thus all indicating for a short term correction. In the last report we had mentioned to sell short below 12000, we continue to recommend holding the short position by revising stop loss to 12000 (which makes it to the cost). On the lower side one can look for immediate levels of 11800 which is the next important support,” said Manav Chopra, Head Research-Equity, India-bulls Ventures Ltd.
"Clouds over economic growth outlook and premium valuation influenced investors to stay away from rate-sensitive stocks. While rising 10-year yield due to spike in inflation and potential slip in fiscal path may result in near term consolidation," said Vinod Nair, Head of Research, Geojit Financial Services.