The Sensex on Friday tanked 1.31 per cent on a global sell-off as a 40-year high inflation in the US triggered concerns of aggressive interest rate actions by its central bank.

While the Sensex crashed 773.11 points to end at 58152.92, the broader Nifty ended with losses of 231.10 points at 17374.75. The crash came as inflation in the US shot up to 7.5 per cent in January, leading to fears that the Federal Reserve may have to raise interest rates sharply this year. It has already guided for hikes from March. Elevated crude prices are already a concern.

On Thursday, the Reserve Bank of India (RBI) had held key rates and signalled a dovish stand leading to a 460 point rally in the Sensex. Market circles added that equity prices will continue to be news flow driven and investors must brace for more bad news in the days ahead.

IT stocks led the fall in Friday’s trading with Tech Mahindra shedding 2.94 per cent followed by Infosys, HCL Technologies and Wipro, which fell by up to 2.71 per cent. Banking and finance stocks also came under pressure with SBI falling around 2.06 per cent.

At the broader level, the Nifty Midcap 100 fell 2.02 per cent, while the Nifty Smallcap 100 tumbled 2.37 per cent.

However, there was some consolation as provisional data showed foreign portfolio investors (FPIs) making net purchases of Rs 109 crore after days of selling.

"The US inflation surged 7.5 per cent on an annual basis with the consumer price index for all items rising 0.6 per cent in January, fuelling fears of a hawkish rate hike by the central bank. Net purchases by the DIIs (domestic institutional investors) is pumping slight optimism into the market which is countered by heavy FII selling. The direction of the market in the week ahead will be determined by cues from global markets while domestic macroeconomic data and corporate earnings will continue to remain in focus in the near term’’, Vinod Nair, Head of Research at Geojit Financial Services said.