The equity benchmark indices retreated after a six-day rally, weighed by profit booking and renewed foreign fund outflows.
Sensex settled 344.52 points or 0.41 percent lower at 84,211.88, while the Nifty declined to 25,795.15, down 96.25 points or 0.37 percent.
Hindalco Industries, Shriram Finance and Oil & Natural Gas Corporation were among the top gainers in the Nifty pack, rising up to 4 percent intraday, while Hindustan Unilever and Cipla were the major laggards, declining up to 3 percent.
Key factors behind market decline
1) Profit booking: Market participants booked profits in banking, financial services, FMCG, IT and auto stocks following recent gains. The benchmarks had ended marginally higher on Thursday after a volatile session.
"The market rally which began strongly yesterday on news of an imminent trade deal between India and the US lost steam midway and completely fizzled out during the last hour. The positive news regarding the trade deal was not confirmed by the Indian side," said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services. "This dampened the spirits of the bulls who couldn’t force further short covering," he added.
2) Fresh FII selling: Foreign Institutional Investors (FIIs) turned sellers on Thursday, offloading equities worth Rs 1,165.94 crore, ending five straight sessions of buying.
3) India Vix rises: The India VIX, which reflects market volatility and investor sentiment, rose nearly 1 percent to 11.84, indicating a rise in near-term uncertainty.
On the technical outlook, Anand James, Chief Market Strategist, Geojit Financial Services, said Nifty may see sideways movement initially. "If dips are contained above 25,830/25,780, attempts to pull back towards 26,186 could emerge. A vertical rise is less expected. If pullback attempts fail to clear 26,000, downsides may resume, aiming 25,590–25,400," he said.
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