Indian shares sank about 1 per cent on Friday, as banking and financials stocks mirrored the slump in lenders globally, while IT stocks fell on persistent worries of high interest rates ahead of the key U.S. jobs data later in the day.

The Nifty 50 index fell 1 per cent to 17,412.90, while the S&P BSE Sensex lost 1.12 per cent to 59,135.13, posting their biggest one-day decline in over two weeks. The indexes, which were roughly flat for the week at the start of the session, slid to losses of over 1 per cent for the holiday-truncated week.

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The high-weightage financials index tumbled 1.8 per cent on the day, in their biggest slide since Jan. 27, soon after the Hindenberg report on the Adani conglomerate. The Nifty bank index, in particular, slumped 1.87 per cent on the day.

The sell-off in lenders was sparked by a rout in the U.S. bank stocks after Silicon Valley Bank was forced to raise fresh capital after losing $1.8 billion selling a package of chiefly U.S. bonds to meet depositor demands for cash.

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IT stocks lost 0.66 per cent, falling for the third session in a row due to worries about rate hikes in the United States and Europe, where a majority of their clients are based.

The likelihood of the Federal Reserve raising rates has jumped after recent data showed the labour market remained tight and Fed Chair Jerome Powell set the stage for higher and faster rate hikes.

"The comments by Powell come as a jolt for markets, which was assuming that the end of the rate-hiking cycle was near," said Pramod Gubbi, co-founder of Marcellus Investment Managers.

"If the jobs data demonstrates further strength in labour markets, it will imply a reality check for markets globally."

Adding to the worries in the Indian market was the return of selling pressure from foreign investors.

Among individual stocks, Axis Bank fell nearly 2% on multiple block deals.