Equity benchmark Sensex tumbled 769 points on Friday, tracking a weak trend in global equities amid escalating tensions between Russia and Ukraine.
Extending its decline for the third straight session, the 30-share BSE index slumped 1,214.96 points to 53,887.72 during the session after a weak start. It finally finished at 54,333.81, lower by 768.87 points or 1.40 per cent.
Similarly, the broader NSE Nifty slumped 252.70 points or 1.53 per cent to close at 16,245.35.
"Global bourses are witnessing a sharp sell-off as reports of Russian attack on Europe's biggest nuclear plant in Ukraine kept tension levels elevated. Rising oil prices along with uncertainties on supply chain disruption have instilled fears that inflation could cross RBI's tolerance level, though temporarily," according to Vinod Nair, Head of Research at Geojit Financial Services.
The domestic market, however, trimmed its losses as buying was witnessed in IT and pharma stocks.
Titan, Maruti Suzuki India, Asian Paints, Mahindra & Mahindra and Hindustan Unilever Limited were the biggest drags on the Sensex, tumbling up to 5.05 per cent.
In contrast, ITC, Dr Reddy's Laboratories, Tech Mahindra and UltraTech Cement were among the gainers.
Bourses in Hong Kong, Shanghai and Tokyo settled significantly lower.
Stock exchanges in the US closed in the negative zone in the overnight session.
Meanwhile, international oil benchmark Brent crude rose 0.80 per cent to USD 111.3 per barrel.
Foreign institutional investors continued their selling spree in Indian markets as they offloaded shares worth Rs 6,644.65 crore on a net basis on Thursday, according to exchange data.
Rupee Plunges Below 76-Mark On Soaring Crude Amid Ukraine-Russia War
The rupee on Friday slid below the 76-mark for the first time this year and settled at an 11-week low as investors assessed the global economic impact of the Russia-Ukraine conflict amid rising crude oil prices.
The rupee fell by 23 paise at close to 76.17 against the US dollar, the lowest closing level since December 15, 2021.
Persistent foreign fund outflows and a weak trend in domestic equities also weighed on the local unit, forex traders said.
At the interbank foreign exchange market, the rupee opened weak at 76.06 against the American dollar and fell further during the session as investors dumped riskier assets. The domestic unit oscillated between a high of 75.99 and a low of 76.22 during the session.
The rupee this week has weakened by 1.11 per cent or 84 paise, making it second straight week of losses for the local unit due to persistent forex outflows and rising crude oil prices.
"Recent market environment continues to favour a stronger dollar against rupee as there are high chances of the government missing fiscal target following a surge in crude oil prices and delay in diversification. Higher commodity prices could turn into imported inflation and the central bank will be forced to change stance in coming months," HDFC Securities Research Analyst Dilip Parmar said.
Spot USD/INR is expected to stay right with resistance in the range of 76.30 to 76.50 while the support has been shifted to 75.70, he noted.
Looking ahead, the war in Ukraine will remain the primary focus along with commodity prices in particular crude oil and gold, Parmar said.
"The Rupee extended its weekly losses after global markets witnessed a sell-off this morning after Ukraine's state emergency service reported fire at Zaporizhzhia Nuclear Power plant...after shelling from Russian forces," Emkay Global Financial Services said in a note.
The recent sanctions on Russia prompted rating agency S&P Global to cut Russia's credit rating deeper into junk territory. S&P downgraded the sovereign rating to CCC-minus from BB-plus less than a week after dropping it from investment grade, it added.
"The soaring crude oil and commodity prices have also hit economies hard since the Russia-Ukraine conflict began. This has now stoked fears that recent high inflation could combine with stagnant economic growth, making it more difficult for the Federal Reserve and other major central banks to manage interest rate," Emkay Global said.
Meanwhile, a report warned that the conflict could hit global supplies of semiconductor chips which, in turn, could impact various sectors such as automobile, consumer electronics and others.
The US dollar index, which measures the greenback's strength against the basket of six currencies, fell 0.27 per cent to 98.05.
Brent crude futures, the global oil benchmark, fell 0.80 per cent to USD 111.34 per barrel. International crude oil prices shot above USD 120 a barrel for the first time in nine years on Thursday before retreating to USD 111 on Friday.
On the domestic equity market front, the BSE Sensex ended 768.87 points or 1.40 per cent lower at 54,333.81, while the broader NSE Nifty declined 252.70 points or 1.53 per cent to 16,245.35.
Foreign institutional investors remained net sellers in the capital market on Thursday as they offloaded shares worth Rs 6,644.65 crore, according to stock exchange data.