The S&P BSE Sensex dipped below the 29,000-mark by losing over 420 points at the closing session due to profit-booking by funds and retail investors amid firm global cues.
Brokers said participants turned hesitant and indulged in selling activity following data showing retail inflation rose more-than-expected to 5.37 per cent in February.
After rising to 29,183.76 in the morning trade following the passage of Insurance Bill in Parliament, the Sensex slumped 427.11 points or 1.48 per cent to end the session at 28,503.30.
The benchmark tumbled 443.64 points or 1.53 per cent to quote at 28,486.77 during the mid-session trading.
Similarly, the National Stock Exchange index Nifty succumbed to all-round selling and ended the session lower by 128.25 points or 1.46 per cent at 8,647.75.
It was quoting lower by 136.40 points or 1.55 per cent at 8,639.60 during the mid-session, after hitting a high of 8,849.75 in early trade.
The falls marked a sharp retreat from earlier gains of nearly 1 per cent on optimism about the government's reform agenda after Parliament had on Thursday passed a bill raising foreign investment limits in the insurance sector.
Rate cut
The Reserve Bank of India had cut interest rates last week for the second time in as many months, and analysts had expected the central bank to next ease monetary policy at its policy review in June.
Analysts warned a more cautious approach on rate cuts could deprive markets of catalysts after indices hit record highs early this month.
"We are left with no triggers now. Investors will be looking for the fourth-quarter earnings next month to take a fresh view. However, any fall will bring down valuations to a comfort zone," said Daljeet S Kohli, head of research at IndiaNivesh.
Sectoral indices
All BSE sectoral indices ended significantly in the red. Among them, capital goods index was the worst-hit and was down 2.57 per cent, followed by FMCG 1.94 per cent, banking 1.93 per cent and power 1.81 per cent.
Major Sensex losers were BHEL 3.41%, L&T 3.11%, Bajaj Auto 2.64%, Wipro 2.64% and Axis Bank 2.51%, while the only three gainers were Bharti Airtel 0.72%, ONGC 0.56% and NTPC 0.03%.
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March 13, 2015Global markets
European shares edged up at the open on Friday, setting up Germany's Dax index for its longest streak of weekly gains since 1998, as traders added to their bets on an economic recovery in Europe.
Sectors which are exposed to the domestic economy and the euro, which hit a 12-year low against the dollar this week, led gains. Automakers, travel & leisure and real estate were all up 0.6-0.7 per cent at 0813 GMT.
The pan-European FTSEurofirst 300 index was up 0.1 per cent at 1,575.89 points.
Asian shares shook off early losses on Friday, underpinned by overnight gains on Wall Street, while the dollar steadied after its recent rally ran out of steam on disappointing retail sales data.
MSCI's broadest index of Asia-Pacific shares outside Japan was up about 0.1 per cent on the day. It was well off 7-week lows plumbed earlier in the week but still on track for a weekly loss of around 2 per cent.
Japan's Nikkei stock average was up 0.9 per cent ahead of Friday's settlement for Nikkei futures and options contracts expiring in March. Investors with long positions in Nikkei futures would like to see them settle at a higher price.