The S&P BSE Sensex extended losses for the third straight session on Friday, falling 248 points following a sell-off in global markets as the less-than-expected stimulus by the European Central Bank (ECB) failed to lift the investors' sentiment.
The Sensex closed at 25,638 points, down 0.96%, while the 50-share Nifty fell 82 points, or 1.05%, to end at 7,782.
"Nifty further declined today and found support at the 7780 levels. Having said that, if the index breaches below the same, we expect selling pressure to intensify in the coming days. Market direction would also depend on the global cues, domestically," said Amar Ambani, Head of Research, IIFL.
On Thursday, the ECB announced a 10bp deposit rate cut to minus 0.30% while the markets had expected the cut to be 15-20bps. It also extended the quantitative purchase (QE) programme by six months but did not increase its monthly asset purchases.
"Markets priced a 15bp deposit rate cut ahead of the meeting and most analysts also expected an expansion of the monthly purchases, hence the measures were not enough to fulfil expectations," said Danske Bank in a note.
Disappointing ECB easing weighed on the Asian stocks, with Japan's Nikkei falling by over 2%, while China's Shanghai Composite index and Hong Kong's Hang Seng index declining by 1.6% and 0.8% respectively.
The sell-off in domestic stock markets was also partly led by growing fears over interest rate hike in the US this month.
Led by concerns over rate hike in the US, the rupee fell to 66.99 against the dollar, reaching its lowest level since September 2013.
Meanwhile, Power, Finance and Realty were the biggest losers among the BSE sectoral indices, Healthcare and Metal indices remained slightly supported.
Shares of auto and IT companies, which have a presence in Chennai, were beaten down due to disruption to their operations in the flood-hit capital of Tamil Nadu.
"The coming week promises to be full of action. Among the major macro-economic data on tap are the Q3 BoP Current Account Balance, exports & import data for the month of November and October Industrial Production data," sid Ambani.