Fresh foreign capital outflows also affected the market sentiment. FPI and FIIs sold shares net Rs 859.87 crore during the week as per the SEBI's data including the provisional figure of April 8.
The Sensex resumed higher at 25,333.98 and firmed up to 25,424.15 on Monday ahead of the Reserve Bank of India's rate cut. However, it dropped to 24,608.51 as key policy rate cut of 0.25 per cent from RBI failed to induce investors before finishing the week at 3-week low at 24,673.84, showing a loss of 595.80 points or 2.36 per cent.
The NSE 50-share Nifty also dropped by 157.85 points or 2.05 per cent to 7,555.20. It has also tumbled by 161.30 points or 2.09 per cent in two weeks.
Meanwhile, private sector manufacturing and services activities surged to a 37-month high in March on new business orders even as job growth remained sluggish, a monthly survey showed.
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Foreign investors turned neutral and started selling in small quantities led by muted expectations of fourth quarter results.
In the broader market, the BSE mid-cap index fell by 48.06
points or 0.45 pct to settle at 10,594.26.
Among the S&P, BSE sector and industry indices, Banking fell by 4.07 per cent, Auto 2.35 per cent, FMGC 2.15 per cent, IT 1.85 per cent, Consumer Durables 1.85 per cent, Teck 1.76 per cent, Consumer goods 1.74 per cent, and Realty 1.71 per cent.
While, Healthcare rose by 0.71 per cent followed by Power 0.63 per cent and oil & gas 0.57 per cent.
In the 30-share Sensex pack, 23 stocks declined and the remaining 7 gained during the week.
However, Lupin rose by 5.14 per cent, followed by BHEL 4.75 per cent, M & M 3.23 per cent, Dr Reddy 1.87 per cent, Tata Steel 1.43 per cent and NTPC 1.23 per cent.
Forex: The rupee failed to maintain last week gains
The rupee resumed lower at 66.30 per dollar as against the last weekend's level of 66.26 per dollar at the Interbank Foreign Exchange (Forex) market and dropped further to 66.73 per dollar on initial dollar demand from banks and importers.
However, it recovered afterwards to more than 3-month high at 66.07 per dollar on selling of dollars by some banks and exporters in view of weakness of dollar in the overseas market before ending the week at 66.47 per dollar, showing a loss of 21 paise or 0.32 per cent.
In the global market, the dollar touched nearly 18-month low against the Japanese currency as investors continued to be confident that Tokyo will not intervene in the market.
Meanwhile, Finance Minister Arun Jaitley said that the rupee does not face any "serious challenge" of depreciation and will find its own level after initial bouts of volatility.
His comments have come against the background of Barclays forecasting the rupee to drop to an unprecedented 69 a dollar by June 30 and weaken further to 70.50 by September 30 and end the year at 71.50 a dollar.
since the beginning of the year as fears about global growth drove investors into haven assets like the yen, gold and US sovereign debt. The fact that the yen has remained buoyant even as risk assets like stocks have climbed off their yearly lows suggests investors remain wary of another selloff.
Back home, in forward market, premium for dollar dropped further on persistent receiving from exporters.
The benchmark six-month forward dollar premium payable in September fell to 198-200 paise from the last weekend's level of 210-212 paise and far-forward contracts maturing in March also declined to 392-394 paise from 407-409 paise previously.
The rupee rebounded against the pound to end at 93.81 from the last weekend's level of 95.50. However, it moved down further against the euro to close at 75.81 from 75.40.
The domestic unit slipped against the Japanese unit to finish at 61.35 per 100 yens from 59.02 last weekend's level.
Oils and Oilseeds: Edible oils and castorseeds surged,
during the truncated week, while linseedoil eased at the wholesale oils and oilseeds market under review.
Refined palmolein also firmed-up despite volatility owing good buying from retailers.
Castorseeds bold and castor oil commercial rallied further on heavy demand from shippers and soap manufacturing units.
However, linseeds moved down due to lower offtake from paint and allied industries.
The oilseeds market was closed on 8th April (Friday) on account of 'Gudi-Padava'.
Groundnut oil opened sharply higher at Rs 1,120 and ruled at the same level before slipping to close at Rs 1,110 as compared to last Saturday's closing level of Rs 1,090, still revealing a gain of Rs 20 per 10 kg.
Turning to non-edible section, castorseeds bold commenced higher at Rs 3,130 and continued its rally to conclude at Rs 3,290 as against last weekend's close of Rs 3,120, reaping a sharp gain of Rs 170 per 100 kg.
Similarly, castor oil commercial resumed higher at Rs 656 and advanced further to end at Rs 688 as compared to previous weekend's level of Rs 654, showing a good gain of Rs 34 per 10 kg.
Bullion: Snapping a four-week retreat, gold bounced back
dramatically at the bullion market here on emergence of frantic buying from jewellery stockists and retailers ahead of a busy festival and wedding season.
The domestic sentiment glittered after a strong wave of buying swept across overseas markets after the Federal Reserve minutes showed caution among policy makers regarding raising interest rates, triggering renewed buying interest.
Moreover, the recent sharp correction in gold prices attracted huge buying opportunity for speculators to take long positions backed by increased offtake from retail consumers as well as wedding-related demand.
Despite a subdued start, precious metal staged a strong comeback during the mid-week trade and maintained the rising momentum till the fag-end trade.
The yellow-metal had lost a whopping 3.37 per cent in the past four-week downslide.
Elsewhere, silver remained under immense selling pressure due to consistent unwinding from traders as well as lower demand from consuming industries.
In worldwide trade, the shiny-metal strengthened further after the minutes of the March FOMC meeting confirmed the more dovish stance adopted by the US Federal Reserve amid rising financial market volatility.
A weaker dollar also provided much needed support.
In contrast, the industrial metal declined further owing to poor demand. It skidded the key significant USD 15 an ounce mark briefly before regaining some lost ground.