Giving up early gains, benchmark Sensex tumbled 287 points to end at 34,010 on Friday on widespread selling in auto, metal, PSU, capital goods, realty and banking counters.
Punjab National Bank, at the centre of a massive Rs 11,400-crore fraud, fell for the third straight session. The BSE 30-share barometer, after a robust start, advanced to a high of 34,508.24 in morning trade.
However, it succumbed to across-the-board profit-booking in the later part of the session to touch a low of 33,957.33, before settling 286.71 points, or 0.84 per cent lower at 34,010.76.
The NSE Nifty settled the day 93.20 points or 0.88 per cent lower at 10,452.30 after shuttling between 10,612.90 and 10,434.05.
Both the indices ended flat for the week. The Sensex rose marginally by 5 points, or 0.01 per cent, while the Nifty slipped by 2.65 points, or 0.02 per cent.
Foreign portfolio investors (FPIs) sold shares worth Rs 240.29 crore, while domestic institutional investors bought shares worth Rs 49.92 crore on Thursday, as per provisional data.
“Market slid despite a positive trend in global market. The alleged fraud in PNB dented investors' optimism on banks and they expect that the scam may extend to some other banks. Further, India’s trade deficit which widened in the month of January and rising bond yields are likely to add volatility in the near term,” said Vinod Nair, Head of Research, Geojit Financial Services.
Sentiment turned weak after the country's trade gap soared to $16.3 billion in January on account of a 26.1 per cent increase in imports to $40.68 billion due to increased inbound shipments of crude oil, as per data released by the Commerce Ministry.
India's exports grew by 9 per cent to $24.38 billion in January, helped by a healthy growth in shipments of chemicals, engineering goods and petroleum products.
The Nifty PSU bank index fell 2.49 per cent as a result of massive fall in public sector lenders like SBI, PNB, Union Bank of India, Bank of India and Bank of Baroda.
Shares of Union Bank of India declined more than 1.25 per cent after the lender said it has an exposure of Rs 1,900 crore to the PNB fraud case.
Similarly, Gitanjali Gems, named in the fraud case, slumped 20 per cent. PNB lost 2.10 per cent. SBI was the biggest loser among Sensex components, falling by 2.55 per cent, followed by Yes Bank at 2.52 per cent.
Other laggards were ICICI Bank, Maruti Suzuki, Bharti Airtel, Adani Ports, Tata Steel, l&T, IndusInd Bank, Tata Motors, Coal India, Power Grid, RIl, Axis Bank, Hero MotoCorp, Bajaj Auto, M&M, ONGC and ITC, losing up to 2.31 per cent.
In contrast, Infosys and TCS remained in better shape and rose by up to 0.96 per cent.