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The banking, oil and metal sectors were the top sectoral losers on the BSE, while IT stocks rendered support at lower levels.
Benchmark share indices had a choppy ride on the first session of the July F&O series before ending with modest losses, amid weak Asian cues, as the Shanghai markets slumped on margin crackdown and policy uncertainty.
The floundering Greece debt talks amid a looming deadline on Tuesday further added to the sense of nervousness on Dalal Street.
The Sensex swung in a range of around 250 points between an intra-day high of 27,921 and a low of 27,675 before ending at 27,811, lower by 85 points or 0.3% and Nifty ended at 8,381, down 17 points.
The mid-cap and small-cap indices ended flat at 10,686 and 11,124 respectively.
On the currency front, the rupee continued to trade flat against the US dollar at 63.60 as gains in the US currency overseas capped upside gains.
"Indian equity markets have gained nearly 2% during the week, led by banking and capital goods sectors. There was fairly high activity seen by FIIs in the derivatives markets, mainly due to the monthly expiry week in F&O segment. For the week, FIIs were net buyers of more than Rs 8,000 crore, albeit for the month they are net buyer of Rs 3,000 crore therefore suggesting that there was some bit of short-covering by FIIs in derivatives segment during the last week. Overall, markets are expected to remain in a trading zone for some more time," said Sachin Shah, Fund Manager & Head, Emkay PMS.
Meanwhile, RBI Governor Raghuram Rajan has asked central banks from across the world to define "new rules of the game" as he warned that the global economy may be slipping into problems similar to the Great Depression of the 1930s.
State-run banks are currently "sufficiently" capitalised, but it would be better if the government injects more capital in this fiscal year, Reserve Bank of India Deputy Governor R Gandhi said on Friday. Gandhi added that banks would need more capital to meet the global Basel III regulatory requirements.
Global Markets
Investors stampeded out of Chinese stocks on Friday amid increasing signs that the country's eight-month-long bull run was running out of fuel.
The Shanghai Composite Index lost 7.4% to 4,192.87 points as regulatory vigilance on high risk margin trading while the uncertainty over Beijing's monetary policy stance also weighed on sentiment.
Shares in Hong Kong also tracked weakness in the mainland. The Hang Seng was down nearly 2%. Further, Japan's benchmark index, the Nikkei ended down 0.3% while Straits Times was down 0.8%.
European shares also opened lower tracking the sharp sell-off in China while uncertainty of Greece concluding a deal with its creditors to avoid debt default also weighed on investor sentiment. The CAC-40, DAX and FTSE-100 were down 0.6%-1% each.
Greece Deadlock
Greece and its creditors again failed to resolve their differences on Thursday, paving the way for a last-ditch effort on Saturday to avert a default on June 30, the deadline for Greece to make a 1.5 billion euro payment to the IMF, and the day its EU bailout will expire. Either Greece will default on its payment or it will get an extension to repay debt.
Sectors & Stocks
The banking, oil and metal sectors were the top sectoral losers on the BSE.
Financials witnessed selling after the Reserve Bank of India highlighted weakness in asset quality on the back of rising trend in stressed advances ratio of scheduled commercial banks (SCBs), especially of public sector banks (PSBs).
ICICI Bank lost 1.4% at Rs 310. Post market hours on Thursday, the banking heavyweight had announced a reduction of 5 basis points (bps) in its base rate to 9.70% per annum (pa) from 9.75% with effect from 26 June 2015. Kotak Mahindra Bank, Yes Bank, Axis Bank and HDFC Bank ended lower by 0.7-2% each. However, SBI retraced lost ground to end the day on a flat note.
The capital goods space also had a rough time, with BHEL and L&T counting among the major losers.
The metal index continued to struggle at 52-week lows; Vedanta, JSW Steel, Tata Steel and Hindalco shed 1-2% each.
The oil space also saw a fair bit of selling pressure, with Gail, Cairn India, IOC and Oil India losing 1-2% each.
However, IT majors bucked the trend as the rupee remained weak around the 63 mark.
Business consulting firm Accenture raised its full-year revenue as well as earnings per share (EPS) forecast, further bolstering the IT space. Infosys, TCS and Wipro were up 1-2% each.
The market breadth was weak. Out of 2,795 stocks traded on the BSE, there were 1,185 advancing stocks as against 1,493 declines.
