Extending its losses for the second day, benchmark Sensex tumbled 329 points to end at 26,231 today as investors hit the exit button amid mounting global concerns.
Participants are in a wait-and-watch mode ahead of US jobs report as well as Italy's constitutional referendum on Sunday, which could determine whether or not the country will remain in the Eurozone.
Caution also prevailed ahead of the Reserve Bank's policy review next week, leading to fall in banking counters.
The BSE Sensex resumed lower at 26,437.37 and hovered in a range of 26,463.06 and 26,182.93 before closing 329.26 points, or 1.24 per cent, lower at 26,230.66, its lowest closing since November 28.
The gauge has dropped by 422.15 points or 1.58 per cent in two days.
The NSE 50-share Nifty dropped by 106.10 points or 1.30 per cent to close at 8,086.80 after moving in a range of 8,159.30 and 8,070.05.
"Since morning, the market was following the rising global anxiety over today's US employment data and the forthcoming Italian constitutional referendum.
"While RBI's market stabilisation scheme (MSS) to suck the excess liquidity out of the system provided some short-lived relief to banks, the ongoing GST Council meet and issues related to dual control and implementation disrupted the investors' mood," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
Sustained foreign capital outflows also affected the market sentiment. Foreign funds sold shares worth a net Rs 402.62 crore yesterday, as per provisional data released by the stock exchanges.
For the week, the Sensex and Nifty both recorded losses by falling 85.68 points, or 0.32 per cent, and 27.50 points, or 0.33 per cent, respectively.
All the sectoral indices, led by consumer durables, FMCG and auto, ended with losses up to 2.32 per cent as selling pressure intensified.
Overseas, Asian stocks declined on global uncertainties. Key Asian indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan fell by 0.31 per cent to 1.37 per cent.
European indices were trading lower in their afternoon trade, with key indices in France, Germany and London falling by 0.93 per cent to 1.33 per cent.
The BSE Mid-Cap index was provisionally down 1.26 per
cent, while the small-cap index fell 1.37 per cent.
A total of 26 stocks in the 30-Sensex pack closed lower, while 4 finished higher.
Stocks of some auto makers recorded loses on slump in their November sales following demonetisation, brokers said.
Telecom shares, which recorded widespread losses in yesterday's trade after Reliance Jio announced extension of free voice and data offer for existing and new consumers till March 31, staged a comeback on fresh buying.
Idea Cellular and Reliance Communications edged higher by up to 0.75 per cent.
Losers included Asian Paints (3.57 per cent), Maruti (3.44 per cent), Tata Motors (3.37 per cent), Adani Ports (3.13 per cent), HDFC (2.35 per cent), ITC (2.12 per cent), TCS (1.88 per cent), Dr Reddy's (1.87 per cent), L&T (1.82 per cent), Gail (1.73 per cent), Lupin (1.62 per cent), Wipro (1.61 per cent), HUL (1.55 per cent) and M&M (1.39 per cent).
However, Bajaj Auto rose by 0.64 per cent, followed by Cipla (0.57 per cent), Hero Motocorp (0.17 per cent) and ICICI Bank (0.12 per cent).
Among the BSE sectoral indices, Consumer Durables fell by 2.32 per cent, Industrials 1.85 per cent, FMCG 1.62 per cent, Auto 1.61 per cent, Capital Goods 1.51 per cent, Realty 1.40 per cent, Finance 1.33 per cent and Oil&Gas 1.30 per cent.
Market breadth remained negative as 1,794 stocks ended lower, 871 finished higher while 126 ruled steady.
The total turnover on BSE amounted to Rs 2,727.04 crore, lower than Rs 2,776.34 crore registered yesterday.
