The BSE Sensex fell more than 2 percent on Friday to its lowest in nearly 14 months, on weak global cues amid caution ahead of a key U.S. jobs report due later in the day.
A strong jobs number could cement optimism on the global economy and boost share prices but it could rekindle speculation of an early rate hike by the Federal Reserve, which could hurt risk assets, particularly in emerging economies.
Asian shares extended losses on Friday as caution over a U.S. jobs report overshadowed signals from the European Central Bank that it is willing to take further steps to shore up the European economy. China`s financial markets were closed on Friday for a national holiday.
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"The uncertainty over the U.S. Fed rate hike is spooking global markets and the Nifty is no exception," said Arun Gopalan, vice president at brokerage Systematix Shares & Stocks.
"We could witness further downside on the Nifty if the Fed hikes rates in September."
The BSE Sensex was down 2.1 percent at 1:46 p.m. after falling as much as 2.36 percent to 25,156.05, its lowest since July 15, 2014.
The broader Nifty was 2.1 percent lower after declining as much as 2.38 percent to 7,636.05, its lowest since Aug. 7, 2014.
Both indexes were headed for their fourth straight weekly loss.
All sectors were in the red.
ICICI Bank fell 3.7 percent, while Housing Development Finance Corp dropped 2.98 percent.
Market heavyweight Reliance Industries Ltd was down 2.6 percent.
IT stocks Infosys and TCS fell 2.6 and 1.94 percent, respectively.
Cipla fell 0.8 percent. The drugmaker earlier announced the acquisition of two generics businesses in the United States.
