The Sensex came under fag-end selling pressure to close in the red for the sixth straight session on Friday as risk-off sentiment prevailed amid unabated selling by foreign institutional investors and concerns over inflation.
The 30-share BSE benchmark pared all intra-day gains and declined 136.69 points or 0.26 per cent to end at 52,793.62. During the day, it had rallied 855.4 points or 1.61 per cent to 53,785.71.
On similar lines, the broader NSE Nifty dipped 25.85 points or 0.16 per cent to settle at 15,782.15.
Among the Sensex firms, State Bank of India, ICICI Bank, NTPC, Bharti Airtel, Bajaj Finserv, Axis Bank and Maruti were the biggest laggards.
In contrast, Sun Pharma, M&M, ITC, Hindustan Unilever, Titan and Reliance were among the gainers.
Markets in Asia settled higher, with Tokyo, Hong Kong, Seoul and Shanghai gaining significantly.
Bourses in Europe were quoting higher in the afternoon session.
Stock exchanges in the US had ended on a mixed note on Thursday.
Meanwhile, international oil benchmark Brent crude jumped 1.09 per cent to USD 108.6 per barrel.
Continuing their selling spree, foreign institutional investors offloaded shares worth a net Rs 5,255.75 crore on Thursday, according to stock exchange data.
"This is the season of headwinds for markets. High inflation in the US and the hawkish Fed has pushed up bond yields, negatively impacting equity markets.
"FPIs continue their selling spree further impacting sentiments. To top it all, CPI inflation for April has come at a disturbingly high level of 7.79 per cent, leaving no option for RBI but to turn hawkish in the coming policy meets," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Vijayakumar added that the positive side is that all this bad news is already known and factored-in by the market.
India's headline inflation galloped for a seventh straight month to touch an 8-year high of 7.79 per cent in April on rising food and fuel prices, raising the odds of an interest rate hike by the RBI early next month to tame prices.
Rupee inches 1 paisa higher to close at 77.49 against US dollar
The rupee pared its initial gains and settled just 1 paisa higher at 77.49 (provisional) against US dollar on Friday, as inflation concerns and strength of the American currency weighed on the local unit.
Forex traders said the rupee consolidated in a narrow range, as the weakness in regional currencies and depressing economic data weighed on the domestic unit, while intervention from the Reserve Bank of India (RBI) restricted the losses.
At the interbank forex market, the rupee opened at 77.35 against the greenback and moved in a range of 77.26 to 77.49 in the day's trade.
The rupee finally ended at 77.49, higher by just 1 paisa over its previous close.
On Thursday, the rupee plunged 25 paise to close at its lifetime low of 77.50 against the US currency.
On a weekly basis, the rupee has depreciated 57 paise on the back of a stronger dollar index, risk-off sentiment and foreign fund outflows.
"Among all the drivers, the liquidity factor is inevitably a key driver of recent market moves and market participants are rushing for safe-haven assets," Dilip Parmar, Research Analyst, HDFC Securities, said.
On Friday risk appetite remained dismal with the benchmark equity index erasing morning gains and the rupee also surrendered to the dollar, Parmar said, adding "weakness in regional currencies and depressing economic data weigh on the local unit while intervention from RBI restricted the losses."
Meanwhile, India's headline inflation galloped for a seventh straight month to touch an 8-year high of 7.79 per cent in April on rising food and fuel prices, raising the odds of an interest rate hike by the RBI early next month to tame prices.
With factory output measured in terms of the Index of Industrial Production (IIP) remaining subdued at 1.9 per cent in March, some economists feel that another interest rate hike on the heels of a 40 basis points increase last week may slow economic growth.
On the domestic equity market front, the BSE Sensex ended 136.69 points or 0.26 per cent lower at 52,793.62, while the broader NSE Nifty fell 25.85 points or 0.16 per cent to 15,782.15.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.05 per cent to 104.79.
Foreign institutional investors were net sellers in the capital market on Thursday as they offloaded shares worth Rs 5,255.75 crore, as per stock exchange data.
Brent crude futures, the global oil benchmark, surged 1.56 per cent to USD 109.13 per barrel.
Gold price falls Rs 360 on international trends, rupee appreciation
Gold price declined Rs 360 to Rs 50,127 per 10 grams in the national capital on Friday, reflecting an overnight slump in international precious metal prices and rupee appreciation, according to HDFC Securities.
In the previous trade, the precious metal ended at Rs 50,487 per 10 grams.
Silver fell Rs 252 to Rs 58,916 per kg from Rs 59,168 per kg in the previous trade.
"Spot gold prices for 24 carat gold at Delhi were down by Rs 360 reflecting overnight slump in COMEX gold prices and rupee appreciation," Tapan Patel, Senior Analyst (Commodities) at HDFC Securities, said.
In the international market, gold was trading with gains at USD 1,826 per ounce and silver was flat at USD 20.87 per ounce.
"Gold prices traded up with spot gold prices at COMEX trading 0.24 per cent up at USD 1,826 per ounce on Friday," Patel said.