Indian shares ended lower on Friday, dragged by metals, pharmaceuticals, and financials, while the prospect of gradual reduction of monetary stimulus by the U.S. Federal Reserve further dented investor sentiment.
The blue-chip NSE Nifty 50 index ended 0.71% lower at 16,450.50, while the benchmark S&P BSE Sensex closed 0.54% weaker at 55,329.32.
Investors turned to defensive consumer stocks including Hindustan Unilever and Nestle, both hit 52-week highs before settling at 5.36% and 3.49%, respectively.
Earlier in the session, Hindustan Unilever's market value crossed 6 trillion rupees for the first time, and ended the trade at 6.16 trillion rupees. The Nifty FMCG index ended 2.27% firmer.
A BofA analysis of market rallies suggested the past week's rally had limited runway and that a near-term correction was expected.
"Peak valuations, Fed tapering talk, rise in U.S. yields and the dollar, consensus EPS cuts and muted IPO gains could act as negative triggers," BofA analyst Amish Shah said in a note.
Christopher Wood, the head of global equity strategy at Jefferies, said to signal a "continuing structural bullish view" on India, the brokerage would increase India's weightage in the firm's model portfolio by two percentage points with money shaved from China and Hong Kong.
"There is good news for the economy ahead, with most Indian states lifting lockdowns to coincide with the festive season," Narendra Solanki, head of fundamental research, investment services at Anand Rathi said.
The Nifty Metal index dropped 6.4%, pulled down by shares of Tata Steel, SAIL, Hindalco, Jindal Steel and NMDC — all down between 5.4% and 9.5%.
Pharma stocks ended 2.56% lower while the banking index ended 1.4% weaker.
Auto-maker Eicher Motors fell as much as 2.64% before closing 0.46% higher after shareholders voted down the reappointment of Managing Director Siddhartha Lal.
Global shares fell for the fifth straight day and the dollar remained firm.