Globally, investors are pessimistic about the outcome of the EU summit after EU diplomats told Reuters on Thursday that they would not be able to borrow from the European Central Bank (ECB).
Further, the leaders had also failed to secure backing from all 27 countries on a EU treaty change, which means any forthcoming deal would now involve the 17 euro zone countries and the others who wish to join, reports Reuters.
The news has priced in well among the stocks, currencies and commodities.
All the major stock exchanges around the world have witnessed the steep fall. The benchmark Sensex fell more than 300 points on Friday. It closed at 16,213.46, down by 1.67% or 274.78 points, while the 50-scrip NSE CNX Nifty ended low at 4,866.70, down by 1.56% or 76.95 points.
On the sectoral front on the BSE, all the sectors ended red. Major sectoral losers were Capital Goods, Auto, Realty, Oil & Gas, Power and Metal.
On the National Stock Exchange (NSE), the top volume gainers were R Power, Hindalco, Kotak Bank, Dr Reddy and Jindal Steel posted gains between 0.94% - 1.26%.
The major losers on the NSE were SAIL (5.65%), JP Associates (4.89%), Siemens (4.18%), M&M (3.80%) and Tata Power (3.89%).
Over the Asian bourses, Hong Kong's Hang Seng was ruling down by 2.83%, followed by Japan's Nikkei by 1.48%. China's Shanghai was down by 0.62%.
The negative sentiments have also spilled over the other markets like currencies and commodities.
All major currencies fell against the US dollar. Euro seen down by 0.81% against the US Dollar at 1.3306. Indian Rupee was trading low by 48 paise against US Dollar at 52.23.
Pessimistic views of the investors and traders have not even spared commodities. Brent Crude Oil fell to $107 from $110. Overseas spot gold declined to $1,705 from $1,742 a troy ounce.