Key benchmark indices Sensex and Nifty slipped into negative territory on Friday after a three-day rally, dragged by intense selling pressure in IT, banking and financial stocks.

Unabated foreign fund outflows and elevated crude prices in international markets also played spoilsport for the bourses.

In a volatile session, the 30-share benchmark declined 423.49 points or 0.55 per cent to settle at 76,619.33. During the day, it tumbled 779.53 points or 1 per cent to 76,263.29.

Similarly, the NSE Nifty dropped 108.60 points or 0.47 per cent to 23,203.20.

On the weekly front, the BSE benchmark tanked 759.58 points or 0.98 per cent, and the Nifty declined 228.3 points or 0.97 per cent.

"The markets remained volatile for yet another session, slipping half a per cent after three consecutive days of gains. Early weakness, driven by IT and banking heavyweights reacting to earnings, pulled the benchmark indices lower. However, resilience in key players like Reliance, ITC, and LT helped limit the decline.

"The ongoing tussle between bulls and bears reflects mixed market sentiment, with select heavyweights supporting recovery hopes on a rotational basis. However, persistent FII selling and a mixed start to the earnings season are restricting upward momentum," Ajit Mishra - SVP, Research, Religare Broking Ltd, said.

From the 30-share blue-chip pack, Infosys dropped nearly 6 per cent despite raising its annual sales forecast for a third time this fiscal year.

Infosys Ltd, India's second-largest IT services firm, on Thursday reported an 11.46 per cent rise in the third quarter net profit on pick-up in demand, which also prompted the company to raise its annual sales forecast for a third time this fiscal year.

Axis Bank also declined by over 4 per cent post-earnings announcement.

Kotak Mahindra Bank, Tata Consultancy Services, Mahindra & Mahindra, ICICI Bank, Tech Mahindra, Bajaj Finance, HDFC Bank and Bajaj Finserv were the other big laggards from the pack.

In contrast, Reliance Industries climbed 2.50 per cent higher after the firm reported a 7.4 per cent rise in December quarter net profit as retail business rebounded, telecom earnings surged on higher tariffs and mainstay oil and petrochemicals business delivered consistent performance.

Zomato emerged as the biggest gainer, followed by Reliance, Nestle, Asian Paints and Power Grid.

Meanwhile, IT services company Wipro reported a 24.4 per cent year-on-year rise in its consolidated net profit for the just-ended December quarter at about Rs 3,354 crore. The results were announced after market hours.

The BSE midcap gauge went up by 0.04 per cent, and smallcap index eked out a marginal gain of 0.01 per cent.

"Declines in the banking and IT sectors negatively impacted large caps, causing domestic markets to end lower following a volatile session. A cautious outlook on discretionary spending led to a decline in IT stocks, while private banking stocks declined due to expectations of subdued deposit and credit growth, as well as tighter liquidity conditions. We expect investors to adopt a risk-averse stance on the ongoing Q3 results," Vinod Nair, Head of Research, Geojit Financial Services, said.

BSE Focused IT declined 2.57 per cent, IT (2.48 per cent), teck (2.15 per cent), bankex (1.83 per cent) and financial services (1.18 per cent).

On the other hand, healthcare, energy, realty, metal, capital goods, and industrials, among others, were the gainers.

In Asian markets, Seoul and Tokyo settled lower, while Shanghai and Hong Kong ended in positive territory.

European markets were quoting with gains. US markets ended lower on Thursday.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,341.95 crore on Thursday, according to exchange data.

Global oil benchmark Brent crude climbed 0.17 per cent to USD 81.43 a barrel.

"Markets remained under pressure throughout the trading session as rising US bond yields continue to create uncertainty amongst local investors. With FII fund outflows from domestic equities remaining strong, geo-political uncertainty and concerns over the slow pace in US rate cuts going ahead will keep investors on the edge," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

The 30-share BSE index climbed 318.74 points or 0.42 per cent to revisit the 77,000 level at 77,042.82 on Thursday. On the similar lines, the Nifty rallied 98.60 points or 0.42 per cent to 23,311.80.

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