Brokers said profit-booking emerged at existing higher levels. Sentiment was dampened by an IMF report that said slowdown in Indian economy is attributable to "internal factors", they added.
The BSE Sensex resumed higher at 22,522.46 but immediately came in the negative terrain. In choppy trade, it touched the day's low of 22,339.40 in the late afternoon trade.
Finally, it settled the day at 22,359.50, a loss of 149.57 points of 0.66 per cent from its previous close. This is the second straight day the Sensex is registering losses. Snapping the six-day rally, the barometer had slipped 42 points yesterday.
The NSE 50-share Nifty also declined by 41.75 points or 0.62 per cent to finish at 6,694.35.
"Markets ended the week flat after rising for the past few weeks. Profit-booking set in after the sharp rise seen in recent past," said Dipen Shah, Head of Private Client Group Research, Kotak Securities.
Only realty counter escaped profit-booking. Among 30 Sensex scrips, 25 shares ended lower while the remaining five finished higher.
Public sector BHEL at 1.95 per cent was the biggest Sensex loser for the second day today. Brokers said capital goods and engineering companies may be carrying orders that may not take off and would have to be eventually struck down and this led selling pressure on those counters.
State-run power producer NTPC also lost 1.95 per cent.
Telecom major Bharti Airtel suffered a hit of 1.74 per cent, while Tata Motors closed 1.50 per cent lower. Gail India, Wipro, TCS, Sun Pharma and Tata Power lost over 1 per cen each.
Among BSE sectoral indices, auto fell by 1.00 per cent, followed by IT at 0.95 per cent, teck 0.92 per cent, power 0.83 per cent and consumer goods 0.74 per cent.
Realty bucked the trend to end by 3.37 per cent higher.
The market breadth turned positive as 1,648 stocks finished in green, 1,135 stocks ended in red and 147 ruled steady. The total turnover dropped further to Rs 2,513.53 crore from Rs 2,967.41 crore yesterday.
"Nonetheless, the session was clearly dominated by Midcap and Smallcap stocks as they kept upholding their positive bias, resultant positive market breadth.
"We have been witnessing stable inflows for last three months and the smart money is chasing value buying opportunities across the board. Hence, any decline or pause in benchmarks hardly impacts the prevailing buying spree," said Jayant Manglik, President, Retail Distribution, Religare Securities.
Foreign Institutional Investors (FIIs) continued their buying spree by investing net Rs 717.39 crore yesterday, as per provisional data from the stock exchanges.
Barring China, which ended higher by 0.74 per cent, other Asian stocks ended lower, after a fresh move by China's central bank to drain liquidity.
Key benchmark indices in Hongkong, Japan, Singapore, and South Korea ended lower by 0.05-0.28 per cent.
European markets were trading higher in their early trade. Key indices in France, Germany and UK moved up by 0.22- 0.38 per cent.
BSE Sensex retreats for a second day; Reliance Industries shares falter
(Reuters) BSE Sensex posted its biggest fall in a month, ending down for a second consecutive session and continuing to retreat from a record high hit in the previous session as investors pared positions in blue chips such as Reliance Industries (RIL).
Caution is setting in ahead of the start of a five-week election process on Monday, while the U.S. jobs monthly data later in the day could impact global markets.
Reliance Industries provisionally fell 0.9 percent, while Housing Development Finance Corp lost 1 percent.
The benchmark BSE index closed down 0.66 percent, its biggest single day fall since March 3, while the broader NSE Nifty index lost 0.62 percent.