Mumbai: Indian stock markets saw a sharp decline on Friday, with both Sensex and Nifty falling by more than 1 percent. On Friday morning, the Sensex dropped by 1,017.03 points, or 1.25 percent, settling at 80,272.93. The Nifty also fell by 306.80 points, or 1.25 percent, to 24,241.90.

The market trend remained negative, with only 340 stocks on the National Stock Exchange (NSE) trading in the green, while 2,047 stocks were in the red. 

The downfall in the market was driven by heavy selling from Foreign Institutional Investors (FIIs), rising US bond yields, and ongoing conflicts in the Middle East. Additionally, the uncertainty around the Federal Reserve's decision on interest rates, set to be announced on December 18, has increased concerns among investors.

On December 12, FIIs sold shares worth Rs 3,560.01 crore in the Indian market, while domestic institutional investors (DIIs) bought shares worth Rs 2,646.65 crore on the same day.

Market experts note that while there are both challenges and support factors in the market, the current situation leans towards a headwind.

"The headwind is the continued selling by FIIs, who have been selling stocks given high valuations in India. They are likely to continue selling at any rise in the market," said experts.

However, a positive factor or 'tailwind' for the market is the decline in inflation.

In the Sensex pack, stocks like Tata Steel, JSW Steel, IndusInd Bank, Axis Bank, Bajaj Finserv, SBI, M&M, and Bajaj Finance were among the biggest losers.

In the broader market, the Nifty Bank index fell by 839.65 points, or 1.58 percent, to 52,376.80. The Nifty Midcap 100 index dropped by 938.85 points, or 1.59 percent, to 58,082.85, while the Nifty Smallcap 100 index fell by 391.85 points, or 2.01 percent, to 19,074.70.

Sector-wise, heavy selling was seen in Nifty PSU Bank, metal, realty, auto, IT, pharma, and FMCG sectors.

IANS