Stocks: Both S&P BSE benchmark Sensex and CNX Nifty continued to decline for the second consecutive week due to persistent selling pressure following rise in crude oil prices in view of unrest in Iraq.
Shares of Power, Refinery, Auto, Capital Goods and PSU declined due to heavy selling pressure from investors.
However, shares of IT and Tech firmed up on good demand from investors due to weakness of rupee against the dollar.
Tepid monsoon forecast and slowdown in buying by foreign funds, who have been major buyers on the domestic bourses, have dampened sentiments, brokers said.
Rising tension in Iraq which drove oil prices to 9-month high and increase in wholesale inflation weighed on stocks.
Costlier crude is a double whammy for the Indian economy, which imports 80% of oil supplies, as trade gap widens and threatens to push inflation higher. This will reduce room for RBI to lower lending rates in a bid to boost growth.
The Sensex resumed slightly higher at 25,239.50 and firmed up further to a high of 25,609.28 on initial strong buying. But declined afterwards to 25,056.18 before settling the week at 25,105.51, disclosing a loss of 122.66 points or 0.49%.
It has lost 290.95 points or 1.15% in two weeks.
The NSE 50-share Nifty also dropped by 30.65 points, or 0.41%, to 7,511.45.
"Concern over higher crude oil and rupee depreciation has dampened market sentiment. Inflation has also come on higher side which leave lower hopes for rate cut in near term," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.
The Wholesale Price Index-based inflation accelerated to 6.01% in May from 5.20% in April.
Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 405.67 crores during the week as per the Sebi's record, including the provisional figure of June 20.
Among the 30-share sensex, 17 fell and 13 firmed up. Major losers were M&M (7.12%), Reliance Ind (4.08%), Hero Motocorp (2.66%), Larsen (2.31%), Tata Power (2.17%), ICICI Bank (2.15%), HUL (1.64%), Maruti Suzuki (1.60%), HDFC Bank (1.25%), NTPC (1.14%), Tata Steel (1.14%) and ONGC (1.12%).
However, Gail India rose by 5.42%, Infosys 4.21%, TCS 3.24%, Axis Bank 2.53%, Cipla 2.51%, Bharti Airtel 1.88% and Wipro 1.39%.
Among the S&P BSE sectoral indices, Power fell by 9.68% followed by Oil&Gas 2.18%, Auto 2.08%, CG 1.61%, PSU 0.89%, Metal 0.71% and Bankex 0.65%.
However, CD rose by 4.41%, IT by 2.84% and Teck by 2.69%.
Total market turnover on the BSE and the NSE dropped to Rs 18,443.21 crore and Rs 91,243.12 crore, respectively from the last weekend's level of Rs 23,388.26 crore and Rs 1,15,538.14 crore.
Forex: The Indian rupee continued to fall against the American currency for the fourth consecutive week by slipping another 41 paise to settle at 60.18 per dollar on persistent dollar demand from banks and importers due to rise in crude oil prices in view of tension in Iraq.
Fall in equity market in view of rise in crude oil prices and fresh foreign capital outflow affected the market sentiment.
The rupee resumed lower at 59.82 per dollar as against the last weekend's level of 59.77 per dollar at the Interbank Foreign Exchange (Forex) Market and breached 60-mark after a gap of more than one month to 60.54 per dollar before setting the week at 60.18 per dollar, showing a loss of 41 paise or 0.69%.
It has dropped by 166 paise or 2.84% in four weeks.
The benchmark S&P BSE-Sensex closed the week lower by 122.66 points or 0.49%.
Pramit Brahmbhatt, Veracity Group CEO said, "Rupee continued to trade weak on weekly basis. In the last four weeks Rupee has depreciated over three%. Taking cues from the growing tensions in Iraq. Last week we saw selling in the equity markets from both FIIs & DIIs.
FIIs sold shares of worth Rs 421 crore and DIIs were the net sellers of Rs 410 crore for the week which weakened the indices for the second consecutive week. Taking cues from this rupee depreciated further".
Last week we saw tensions in Iraq which created global concern, as conflict within Iraq has shut down the country's biggest refinery adding to the worries about exports from the key oil producer. OPEC supplies almost 40% of the global oil demand, so any tension in OPEC countries leads to a global concern.
India imports 80% of its oil requirements so any increase in oil prices will automatically lift up the inflation which is already the biggest hurdle in the growth of India, he added.
Forward dollar premiums ended mixed due to alternate bouts of buying and selling.
The benchmark six-month forward dollar premium payable in November declined to 223-225 paise from last weekend's level of 228-230 paise while far-forward contracts maturing in May 2015 moved up to 469-471 paise from 467.5-469.5 paise.
The RBI fixed the reference rate for the USD at 60.2785 and the Euro at 82.1200 from 59.4783 and 80.7120 previously.
The rupee dropped further to close at 102.52 against the Pound Sterling from 101.31 last weekend and also continued to rule weak against the Euro to 81.75 from 80.87.
It remained weak against the Japanese currency to end at 58.97 per 100 Japanese yen from 58.59 preceding weekend's close.
Oils and oilseeds: Barring linseed oil, both edible and non-edible oils firmed up further at the oils and oilseeds market during the week under review.
Groundnut oil mostly traded stable, though bouts of demand from stockists and retailers led the market to end with good gains.
Refined palmolein also advanced on sustained retail offtake.
Castor seeds bold and castor oil commercial surged following persistent demand shippers and soap manufacturers.
Linseed oil, however, continued to rule stable in absence of any large scale buying from paint and allied industries.
In the edible oils segment, groundnut oil resumed steady at Rs 740 and later rose to Rs 755 before settling at Rs 750 from last weekend's level of Rs 740, showing a rise of Rs 10 per 10 kg.
Refined palmolein opened higher at Rs 564 and moved up further to Rs 575 before ending at Rs 572, showing a smart gain of Rs 12 per 10 kg from previous weekend's level of Rs 560.
Turning to non-edible section, castor seeds bold opened higher at Rs 4,025 and surged further close at Rs 4,150 from its preceding weekend's level of Rs 4,000 per 100 kg, showing a good gain of Rs 150.
Castor oil commercial also commenced up at Rs 835 and later climbed to conclude at Rs 860 from its last weekend's level of Rs 830 per 10 kg revealing a rise of Rs 30.
Linseed oil maintained a stable trend throughout the week and finished at its previous weekend's level of Rs 735 per 10kg.