The Sensex and Nifty ended lower for a fourth straight session on Friday, weighed down by banking stocks, as the government's plan for $7.7 billion stimulus spending raised concerns over fiscal deficit.

The Centre is considering a plan to loosen the fiscal deficit target so that it could spend an additional Rs 50,000 crore ($7.71 billion) in the financial year ending March 2018, two government sources had said on Thursday.

Finance Minister Arun Jaitley had said earlier that the government was looking for ways to lift economic growth, which slipped to a three-year low of 5.7 per cent in the quarter to end-June.

The 30-share BSE index Sensex ended lower by 447.60 points or 1.38 per cent at 31,922.44 and the 50-share NSE index Nifty was down 157.50 points or 1.56 per cent at 9,964.40.

All BSE sectoral indices ended in the negative zone. Among them, realty index plunged 4.29 per cent, followed by metal 3.99 per cent, capital goods 3.29 per cent and infrastructure 2.48 per cent.

Top five Sensex losers were Tata Steel (-4.7%), L&T (-3.49%), Reliance (-2.83%), ICICI Bank (-2.77%) and Hero MotoCorp (-2.59%), while the only two gainers were Wipro (+1.00%) and Coal India (+0.12%).

FII selling

As per provisional data, foreign portfolio investors sold shares worth Rs 1,204.95 crore yesterday, while domestic institutional investors bought shares worth Rs 1,416.55 crore.

Global investor sentiment was subdued after North Korea said it might test a hydrogen bomb in the Pacific Ocean and escalated a war of words with US President Donald Trump.

“This remains a potential threat to the overall markets," said Teena Virmani, Vice-President, Kotak Securities.

“Valuations are still a concern. There will be some kind of profit-booking at these levels wherein a large amount of froth had been built up in the last 1-1/2 months,” said Virmani.

The rupee breached the 65 per dollar level, hitting its weakest point since April at 65.15 per dollar.

Asian stocks fell on the mooted possibility of North Korea conducting another hydrogen bomb test, this time in the Pacific Ocean.

North Korean Foreign Minister Ri Yong Ho said today that he believes the North Korea could consider a nuclear test on an “unprecedented scale” in the Pacific Ocean, South Korea’s Yonhap news agency reported.