The index opened weak on feeble Asian trends and moved erratically between 19,675.68 and 19,899.37 before ending at 19,732.36, a drop of 49.12 points or 0.25 per cent. Yesterday, it had dipped 215.57 points or 1.08 per cent.
Over the week, however, the index added about 463 points, or 2.4 per cent, gaining for the third week in a row.
The broader Nifty index on the National Stock Exchange ended almost flat at 5,850.60, down by 0.10 point. The SX40 index on the MCX-SX ended at 11,706.18, down 28.16 points.
"Indecision was seen due to profit-booking at higher levels, after a strong rally in the week," said Rakesh Goyal, senior vice president at Bonanza Portfolio Ltd. "Going ahead next week, the RBI's monetary policy is coming, wherein rate cut hopes are minimal due to pressure on the rupee."
The Prime Minister's Economic Advisory Council cut the nation's GDP growth forecast to 5.3 per cent for FY14 from an earlier estimate of 6.4 per cent.
The Reserve Bank of India (RBI) should continue its tight monetary policy until stability in the rupee value is achieved, Prime Minister's key economic advisor C Rangarajan said today while releasing the Economic Outlook for 2013-14.
Concerns over growth and the monetary policy outweighed positive economic data that showed industrial output expanded 2.6 per cent in July after two months of contraction and retail inflation easing to 9.52 per cent in August.
Asian shares, except in Japan, showed a weak trend as US retail sales figures were awaited ahead of next week's crucial meeting of the Federal Reserve, which may start tapering its bond-buying programme. European markets, too, traded lower.
Among the sectoral indices, S&P BSE-Consumer Durables moved down 1.54 pc, followed by S&P BSE-IT 1.43 pc, S&P BSE-Teck 1.12 pc and S&P BSE-FMCG 0.97 pc. S&P BSE-Realty rose 2.72 pc, S&P BSE-Power 2.47 pc, S&P BSE-CG 2.27 pc and S&P BSE-PSU 1.85 pc.
The market breath was positive as 1,356 stocks closed higher and 1,045 ended lower. Total turnover on the BSE dropped to Rs 1,856.21 crore from Rs 2,817.90 crore yesterday.
Foreign institutional investors sold a net Rs 98 crore of shares today after buying Rs 930.54 crore of stocks yesterday, as per provisional data with the stock exchanges.
Dipen Shah, Head- Private Client Group Research, Kotak Securities:
The markets were largely flat on Friday but for the week, they continued the good run which started in the previous week. Nifty / Sensex rose by about 3% with the mid-cap index outperforming the benchmarks. During the week, beaten down sectors like Realty, Capital Goods, Infra, Auto, etc rose by between 5% - 8%, reflecting the reversal of sentiment on these sectors after a long time. On the other hand, IT index ended marginally lower.
The initiatives taken by the RBI to stop the depreciation of the rupee, have had the desired impact, with the rupee appreciating significantly. This cheered the markets with rate sensitives and investment oriented sectors doing well. Moreover, the easing of tensions on the Syrian issue also brought back some risk on the table.
Going ahead, the policy decision by the Fed and its guidance, if any, on tapering of the quantitative easing measures will be closely watched. The first meeting of the RBI under the new Governor will also be an important trigger for the market, especially the decision on interest rates.
Any decision by the US Fed to taper the bond buying program, may have an impact on the global liquidity. We believe that, some tapering off is already priced in and to that extent, if the actual amount of taper matches expectation, it may not be taken negatively by the markets.
BSE Sensex down 49 points at 19,732.76 in choppy trade
(Reuters) BSE Sensex fell for a second day on Friday as blue chip shares including ITC Ltd declined after the Prime Minister's economic panel said it would be a challenge for the government to meet its fiscal deficit target in the current year.
India's new Reserve Bank of India (RBI) chief Raghuram Rajan to detail his first monetary policy review on Sept. 20 with focus squarely on whether the cbank will partly or wholly reverse its cash tightening steps or give an indication on when they might be rolled back.
ITC Ltd shares fell 1.9 percent while ICICI Bank ended 1.7 percent lower.
Also, traders lightened positions ahead of the whole price inflation data on Monday and the US Federal Reserve's decision on stimulus tapering, as well as RBI policy review later next week.
The benchmark BSE Sensex fell 0.25 percent while the broader NSE Nifty ended almost flat.