Led by a sell-off in auto and banking stocks, the 30-share Sensex cracked 560.45 points or 1.44 pc to settle at 38,337.01.
Mumbai: The BSE Sensex crashed 560 points while the broader NSE Nifty closed much below the key 11,500-mark on Friday after the government thwarted hopes of tax relief for FPIs.
Lacklustre earnings, slowing consumption and already pricey valuations further kept a lid on buying sentiment, traders said.
Led by a sell-off in auto and banking stocks, the 30-share Sensex cracked 560.45 points or 1.44 per cent to settle at 38,337.01. Similarly, the broader NSE Nifty sank 177.65 points or 1.53 per cent to 11,419.25.
This was the second-biggest fall for the Sensex in 2019. The index had plunged 792.82 points on July 8 following the Budget.
Investors have suffered a wealth erosion of about Rs 3.79 lakh crore in the previous two sessions, with the market capitalisation of BSE-listed companies standing at Rs 1,45,34,758.53 crore.
During the week, the Sensex declined by 399.22 points or 1.03 per cent, while the Nifty shed 133.25 points or 1.15 per cent.
M&M, Bajaj Finance, Tata Motors, Hero MotoCorp, IndusInd Bank, Yes Bank, Bajaj Auto, Kotak Bank, SBI and ICICI Bank were among the top losers Friday, dropping up to 4.36 per cent.
Index heavyweight RIL closed 1.01 per cent lower ahead of its quarterly results.
NTPC, PowerGrid, TCS and ONGC were the only gainers in the Sensex pack, spurting up to 2.32 per cent.
Replying to a debate on the Finance Bill in Parliament after market hours on Thursday, Finance Minister Nirmala Sitharaman dismissed the argument that the proposed hike in tax on the super-rich would spook foreign portfolio investors (FPIs).
She said the tax hike on individuals earning more than Rs 2 crore will not impact FPIs provided they organise themselves as a company.
"Indian capital markets are in capitulation mode, as there has been clear dearth of good news. The continuous corporate defaults, high-tax regime, weak earnings season and fragile economy are not helping the already-delicate sentiment. With the crisis deepening and widening, markets are eagerly looking forward if policy makers can talk-up the markets with market-friendly tone.
"Going forward, Fed's policy holds key to revive the market sentiment if they can provide delight with 50 bps rate cut," said Jagannadham Thunuguntla, Senior VP and Head of Research (Wealth), Centrum Broking Limited.
Sectorally, BSE auto, bankex, finance, basic materials, healthcare and FMCG indices plunged up to 3.24 per cent.
Power and consumer durables were the only gainers, rising up to 0.36 per cent.
The BSE midcap and smallcap indices too succumbed to the wider sell-off and lost up to 1.99 per cent.
On a net basis, foreign institutional investors sold equities worth Rs 1,404.86 crore Thursday, while domestic institutional investors purchased shares to the tune of Rs 329.05 crore, provisional data available with stock exchanges showed.
Elsewhere in Asia, Shanghai Composite Index, Hang Seng, Kospi and Nikkei ended up to 2 per cent higher after US Federal Reserve officials hinted at aggressive rate cuts at its July 30-31 policy meeting.
Bourses in Europe were also trading in the green in their respective early sessions.
On the currency front, the Indian rupee appreciated 5 paise to 68.92 against the US dollar (intra-day).
Meanwhile, the global oil benchmark Brent crude futures soared 1.71 per cent to USD 62.99 per barrel.