The benchmark index ended lower by 180 points as the markets continues to be haunted by the Satyam scandal. Selling pressure in metal stocks and weak global cues further hit the investor sentiment.
The Sensex ended at 9,406 while Nifty fell by 47 points to 2,873. The markets ended in deep red even though inflation continued to fall further. For the week ended December 27, it ended at 5.91 per cent.
Satyam plunged 40 per cent to Rs 23 as investors questioned the survival of the outsourcing firm.
Mehraboon Irani, senior VP & head of PMS, said that markets have reacted in a kneejerk fashion after the Satyam scandal broke out. After the Satyam episode, investor sentiment is higher in companies that, according to them, score better in corporate governance, he added.
Despite the sharp selloff today, other frontline IT stocks ended higher today. TCS gained over 6 per cent, Wipro rose over 3 per cent while Infy ended 0.6 per cent higher.
Realty stocks were hammered today as news came in that the CFO of DLF, Ramesh Sanka, had sold 1 lakh shares this month. DLF stocks had plunged to 52-week low of Rs 145 during the intraday trade before posting a sharp recovery after Sanka came out with a clarification. The stock ended at Rs 217, down over 7 per cent. He said that he still owns over 3 lakh shares and has not resigned from the company. The share sale was due to personal reasons, he said.
The BSE realty index ended lower by over 5 per cent. Orbit Corp and Sobha Developers were other major losers in the realty pack, down over 8 per cent.
However, the metal index was the biggest loser among the sectoral indices on the BSE, after metal prices fell sharply at the London Metal Exchange. The BSE metal index fell over 7 per cent. Tata Steel, Hindustan Zinc, SAIL and Sterlite fell over 8 per cent.
The other losers among the Sensex stocks included RCom, and Rel Infra, down between 7 per cent to 9 per cent.
Most Asian stock markets fell on Friday amid more corporate gloom and worries that a key US jobs report could show recession in the world's largest economy is deepening.
After fluctuating in the morning, markets trended down later in the session as investors awaited closely watched non-farm payrolls data, due out later in the U.S., that's expected to reveal massive job losses as the global downturn leads companies to lay off workers and curb hiring.
Economists predict the American economy shed 550,000 jobs or more, with the unemployment rate jumping from 6.7 per cent in November to 7 per cent in December, which would be the highest in more than 15 years.
Dismal corporate news out of Asia also weighed on investors.
In Japan, electronics component maker TDK Corp said late Thursday it would cut 8,000 workers and post its biggest net less ever this fiscal year. South Korean automaker Ssangyong Motor announced Friday it applied for protection from creditors to buy time to restructure, calling the move an "unavoidable choice" as it struggles with a liquidity crisis.
"Basically there's not much direction," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. "People still fear the market will go down. All the economic figures show the global economy is in a mess, it's not going to climb out anytime soon."
Tokyo's Nikkei 225 stock average moved in and out of the green, trading 39.62 points lower, or 0.5 per cent, at 8,836.80 by the close. Hong Kong's Hang Seng Index lost 38.47 points, or 0.3 per cent, to 14,377.44, after rising earlier in the session amid what analysts said was speculation about central government aid for the power sector.
In South Korea, the Kospi shed 2.1 per cent even as the country's central bank cut its key interest rate for the fifth time in just three months to help shore up the country's sagging economy.
Benchmarks in Taiwan and Singapore sank, while those in Shanghai and Australia advanced.
Overnight in New York, Wall Street closed mixed after lawmakers and Citigroup worked out a deal that could support the battered housing sector by limiting the number of mortgage foreclosures. Sentiment was hurt after Wal-Mart Stores issued a profit warning and reported dismal sales for December, heightening fears that consumers are faring even worse than thought.
The Dow ended down 27.24, or 0.31 per cent, at 8,742.46 after being down as much as 119, but broader stock indicators climbed. The Standard & Poor's 500 index rose 3.08, or 0.34 per cent.
US futures pointed to losses on Wall Street ahead of the government jobs report.
Oil prices recovered moderately, with light, sweet crude for February delivery up 24 cents to $41.94 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract overnight fell 93 cents to settle at $41.70.