Equity benchmark Sensex opened on a positive note on Friday, but soon pared initial gains and dropped over 150 points, tracking losses in index majors HDFC twins, ICICI Bank and TCS.

The 30-share BSE index was trading 158.99 points or 0.33 per cent lower at 48,531.81.

Similarly, the broader NSE Nifty fell 59.50 points or 0.40 per cent to 14,637.

M&M was the top loser in the Sensex pack, shedding over 2 per cent, followed by ONGC, Bajaj Auto, Maruti, TCS, HDFC duo and Bajaj Finance.

On the other hand, Asian Paints, Dr Reddy's, TCS, Sun Pharma and HUL were among the gainers.

In the previous session on Wednesday, Sensex slumped 471.01 points or 0.96 per cent to finish at 48,690.80, and Nifty tumbled 154.25 points or 1.04 per cent to 14,696.50.

Foreign institutional investors (FIIs) were net sellers in the capital market as they offloaded shares worth Rs 1,260.59 crore, according to provisional exchange data.

The domestic stock market was closed on Thursday for Id-Ul-Fitr.

"Worse-than-expected inflation data from US (4.2 per cent in April YoY) led to sell-off in US markets with Dow, S&P and Nasdaq declining sharply by up to 2.7 per cent on Wednesday," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The US 10-year yield rose above 1.69 per cent. But this victory for the bond bears proved to be short-lived as equity bulls came roaring back on Thursday, he noted.

"The market verdict, as of now, is that the high inflation print is transitory and, therefore, the Fed will continue on the ultra-loose monetary stance and the tapering of quantitative easing (QE) is far away. This is positive for markets globally.

"Back home, COVID data continues to be grim and the consequent extensions of lockdowns in many states mean growth and earnings in Q1 FY22 will be lower than initial estimates," he added.

Elsewhere in Asia, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading on a positive note in mid-session deals.

Meanwhile, international oil benchmark Brent crude was trading 0.42 per cent lower at USD 66.77 per barrel.