Equity benchmark indices Sensex and Nifty buckled under selling pressure for the second straight session to settle nearly 1 per cent lower on Friday as investors pared exposure to the metal, energy and realty stocks amid a bearish trend in Asian and European markets.

Besides, a depreciating rupee against the U.S. dollar and fresh foreign fund outflows also hit investor sentiments, traders said.

In a volatile trade, the 30-share BSE Sensex declined 398.18 points or 0.69 per cent to finish at 57,527.10, with 24 of its constituents posting losses. During the day, the index witnessed a high of 58,066.40 and a low of 57,422.98.

The broader NSE Nifty fell 131.85 points or 0.77 per cent to slip below the psychological level of 17,000. The index settled at 16,945.05, with 41 of its scrips ending in the red.

On a weekly basis, the BSE benchmark fell 462.8 points or 0.79 per cent, while the Nifty slipped 155 points or 0.90 per cent.

“Markets inched further lower and lost over half a per cent, in absence of any favourable cues. The first half was dull, however, pressure in the index majors changed the tone and pushed the Nifty index below the 17,000 mark. The fall was widespread wherein metal, realty and energy majors felt the maximum heat,” said Ajit Mishra, VP – Technical Research, Religare Broking Ltd.

Bajaj Finserv was the biggest loser among the Sensex constituents, sliding 3.81 per cent, followed by Bajaj Finance, Tata Steel, RIL, HCL Tech, SBI, Larsen & Toubro and Mahindra & Mahindra, Axis Bank and Titan.

Falling for the second day in a row, index major Reliance Industries witnessed an intense sell-off and declined 1.96 per cent.

On the other hand, Kotak Mahindra Bank, Infosys, Tech Mahindra, Power Grid, Asian Paints and Wipro were the gainers.

In the broader market, the BSE smallcap gauge tanked 1.37 per cent and the midcap index declined 1.25 per cent.

“Domestic equities came under pressure after the government passed the Finance Bill 2023 in Lok Sabha. As per the amendments, STT on the sale of options and futures has been increased. However, clarity related to the hike is awaited. The bill also proposed to remove indexation benefits for Debt mutual funds.

“Next week will see further increase in volatility due to monthly F&O expiry amidst the highest FII short position. Also, it would be a shortened trading week due to a holiday on Thursday,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.

Fragile global financial markets are adding to the woes with investors cutting exposure to equities amid concerns of more pain in the medium term, said Amol Athawale, Technical Analyst (DVP), Kotak Securities.

All the indices ended lower, with realty falling 2.28 per cent, followed by metal which declined 2.23 per cent. Commodities, consumer discretionary, energy, financial services, industrials, services and oil & gas were the other major laggards.

“Cues from both the global and domestic markets were subdued. The asset management industry was hit hard by tax changes and the elimination of the indexation benefit of debt mutual funds,” said Vinod Nair, Head of Research at Geojit Financial Services.

The volatility was fuelled by weak European markets, he added.

“Although all major sectors traded in the red, selling in the IT sector was limited despite warnings of muted growth,” Mr. Nair said.

In Asia markets, stock exchanges in Seoul, Japan, Shanghai and Hong Kong ended lower.

European markets were also quoting in the red in the afternoon trade. The U.S. markets ended higher on Thursday.

“Today’s market witnessed volatility and ended with confusion among investors due to the recent announcement of an increase in taxes on debt mutual funds and options trading STT tax,” said Prashanth Tapse, Research Analyst, Sr VP Research, Mehta Equities.

Meanwhile, the rupee declined 25 paise to close at 82.45 against the U.S. dollar.

Global oil benchmark Brent crude dipped 1.73 per cent to $74.60 per barrel.

Foreign Portfolio Investors offloaded equities worth ₹995.01 crore on Thursday after a day’s breather, according to exchange data.

“Nifty continued to fall for the second consecutive session on March 24 pulled down by weak global cues…Global markets were mostly lower on Friday with traders remaining cautious as lingering concerns about the recent turmoil in the banking sector continue to hang over the markets amidst fears of economic slowdown,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

The Lok Sabha on Friday approved The Finance Bill 2023 with 64 official amendments including providing tax relief to some taxpayers opting for a new tax regime and removing long-term tax benefits for debt mutual funds to bring them at par with other interest-earning instruments.