The BSE index (.BSESN) ended the day with a 2% loss, closing at 51,495.79.
Digital Desk: Indian stocks fell more than 2% on Friday after the Swiss National Bank raised interest rates unexpectedly, raising fears that aggressive monetary policy measures to control inflation may lead to a recession.
In a tumultuous trading session, the NSE Nifty 50 index (.NSEI) finished 2.1 percent lower at 15,360.6, pulled down by metal stocks. It had previously hit its lowest point in over a year.
The BSE index (.BSESN) ended the day with a 2% loss, closing at 51,495.79.
With a 50 basis point boost, the Swiss National Bank hiked its policy interest rate for the first time in 15 years, dampening global optimism and sending the safe-haven franc substantially higher.
Its move comes after the Central Bank of the United States approved its largest interest rate hike since 1994 on Wednesday, forecasting a slowing economy and rising unemployment in the months ahead.
The NSE index has dropped 5.2 percent this week, on track to have its worst week in more than a year, as investors priced in a 75-basis-point rate hike based on strong U.S. inflation data.
On Thursday, the Nifty metal index (.NIFTYMET) fell 5.2 percent, with Vedanta Ltd (VDAN.NS) closing 8.2 percent lower.
SpiceJet (SPJT.NS) and InterGlobe Aviation (INGL.NS), which owns IndiGo, saw their shares fall 6.7 percent and 5.2 percent, respectively. According to SpiceJet's managing director, the increase in aviation turbine fuel prices is "not sustainable" and could lead to pricing increases.
Coal India (COAL.NS) fell 5.3 percent as the Nifty PSE index (.NIFTYPSE) fell 3.3 percent.
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