A day after the unveiling of union budget that saw equity markets witness wild swings on the bourses, indices suffered yet another session of bearish trend, extending losses for the fourth straight session. Profit-taking by institutional investors saw the 30-share BSE Sensex fell 348.40 points or 1.37% to end at 25,024.35 while the broader 50-share S&P CNX Nifty closed 1.43% lower or 108.15 points at 7,459.60.
From the all-time high of 26,100 level on July 7, the Sensex has tumbled over 1,000 points or 4% since then, mainly on the back of profit-taking.
Dealers said the markets have breached the 7,450-7,500 levels and is heading towards the next support of 7,300.
"There was broad-based selling in stocks from infrastructure, capital goods and power sectors," said a dealer at a brokerage.
Among the major losers, Bhel tumbled 8.64%, NMDC dropped 7.91%, Hindalco fell 5.93% and DLF was down 5.85%.
Foreign institutional investors were net sellers in the cash and index futures to the tune of Rs 723.48 crore and Rs 533.84 crore, respectively. However, they were net buyers in futures stock segment at Rs 672.18 crore. This indicates that the undertone remains bullish though in select blue chips.
Talks of a Portugal-based bank, Espirito Santo Bank, being on the brink of a default also aided the downward move in the domestic shares. Dealers said the markets that have been rallying on hopes of a good budget are now re-aligning to the developments in global markets.
They said the correction was due as many momentum stocks have appreciated far too above their price earnings. Profit-taking in such mid-cap stocks pulled down other stocks as well, they added.
"We have seen several such turmoil in the financial markets, but our markets have moved ahead," said G Chhokalingam of Equinomics Research and Advisory Services on the Portugal bank crisis.
"Today's correction was largely on account of over-stretched price earnings," he said, adding the bull run would resume once the result season gathers momentum in the remaining part of the month.
With the April-June quarterly corporate earnings now trickling in, dealers expect the Nifty to move in a narrow band of 7,300-7,700 in the immediate term.
Infosys on Friday posted its first quarter earnings which was in line with street expectation. It registered a 21.6% year-on-year growth in net profit at Rs 2,886 crore. The stock closed 1.03% higher at Rs 3,326.65.
"Post the (Infosys) results, IT stocks are once again in the limelight despite an appreciating rupee," said a dealer at research house.
Among the IT stocks that gained on Friday were TCS (by 2.47%), HCL Tech (1.67%) and Wipro (1.16%).
Of the 50 stocks on the Nifty, 13 stocks advanced while 37 declined. Major gainers, apart from technology stocks, were pharma stocks like Sun Pharma (2.44%) and Dr Reddy (1.86%).