Markets extended losses in the last leg of the trade and declined 1% due to selling pressure in financial and mining shares.
The Nifty index opened in the green, at 5,734 tracking firm global cues, but quickly turned negative and edged lower as sentiment turned jittery over proposal of a draft mining bill.
The index touched a low 5,651 in the afternoon session. Also, cautiousness prevailed ahead of the cabinet re-shuffle this weekend.
The S&P CNX Nifty closed down 68 points, at 5,661 and the benchmark Sensex declined 220 points, at 18,858.
Foreign Institutional Investors pumped in Rs 10,088 crore in past nine trading session which helped the recent up move.
Analysts said that Indian markets continued to look weak as participation in this rally was very low and the Nifty was unable to cross 5,740-200 Day Moving Average, which is also the long term resistance.
Anil Manghnani, Director from Modern Shares and Brokers Ltd. said, "Markets are still in a bear phase because the short-term 50-Day Moving Average is below the long term 200-Day Moving Average on technical charts. Also the foreign institutional investors are just churning their portfolio which is moving the market."
HDFC kicked off the results season on Friday.
The net profit for the first quarter was reported at Rs 845 crore against Rs 694 crore during the same quarter last year; this was lower than analysts' expectations.
The Net Interest Income was reported at Rs 1,151 crore. After the result announcement, the stock slipped 1.5%, to Rs 712.
The metal stocks ended lower after the group of ministers headed by Finance Minister Pranab Mukherjee gave a go ahead to the draft bill for the mining sector, which makes it mandatory for coal miners to share 26% of their net profits with project-affected people.
The bill also proposed companies mining other resources to pay 100% of the royalty on their production to the original inhabitants of the project site.
Sterlite Industries and Sesa Goa ended down over 4% each, and Coal India declined 8%, at Rs 362.
Markets extended losses in the last leg of the trade and declined 1% due to selling pressure in financial and mining shares.