The BSE Sensex, which had lost 24.31 points yesterday, dropped further by 201.56 points, or 0.95 per cent, to end at 21,063.62, after touching an intra-day low of 21,015.61.
TCS dropped 5.77 per cent after analysts said the company's margins for December quarter came below estimates.
"TCS was down as despite good results, its margins were lower quarter on quarter basis," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.
Shares of ITC ended 0.26 per cent lower after it reported 16.25 per cent rise in net profit at Rs 2,385.34 crore for the third quarter ended December 31. Selling was also seen in HDFC Bank counter after it logged 25.1 per cent jump in net profit. Overall, 18 counters in 30-share Sensex fell.Wipro fell over 3 per cent ahead of earnings. RIL, which will also announce earnings after markets close, was marginally down. Airtel remained weak for the second day.
The 50-share National Stock Exchange index Nifty fell 57.25 points, or 0.91 per cent, to end at 6,261.65.
With domestic markets witnessing stock-specific action, a mixed trend globally as investors awaited reports on US housing starts and industrial production, also influenced the sentiment, brokers said.
Sectorally, the BSE IT sector index suffered the most by losing 2.55 per cent, followed by Realty index (down 2.40 per cent), Teck index (2.28 per cent) and Banking index (1.57 per cent). Overall, nine out of 12 sectors ended lower.
On a weekly basis, the Sensex closed 305.13 points higher, its best gain in four weeks.
BSE Sensex continue retreat; stable rate view, mixed earnings weigh
BSE Sensex fell nearly 1 percent on Friday after Tata Consultancy Services slumped as its quarterly profit adjusted for other income lagged expectations, sparking some profit-taking in recently outperforming software services exporters.
Software exporters accounted for most losses in the BSE index on Friday. The BSE Infotech index fell 2.6 percent while Tata Consultancy Services slumped 5.8 percent, the most in a day since October 2011.
Traders say fading December-quarter earnings optimism alongside a factored view of stable rates by the central bank at its Jan. 28 meeting after headline inflation fell to five-month lows, might induce some investors to lock in profits.
Institutional flows in cash shares as well as index futures paint a picture of indecision from overseas investors, which may also weigh on sentiment, dealers add.
"Nifty (NSE index) continues to trade in a broad range of 6,000 and 6,400. So on the higher end of the range, we would see profit-booking, and on the lower end of the range buying interest will come in," said Milan Bavishi, head of research at Inventure Growth and Securities.
The benchmark BSE index fell 0.95 percent, or 201.56 points, to end at 21,063.62, retreating for a second consecutive day from its highest level since Dec.
The broader NSE index lost 0.91 percent, or 57.25 points, to end at 6,261.65, closing below the psychologically important 6,300 level.
Both the indexes, however, notched up a weekly gain of nearly 1.5 percent, their first in three weeks, helped by a rally in rate-sensitive stocks ahead of inflation data.
Among other IT stocks, Wipro Ltd fell 3.3 percent ahead of its results later in the day, HCL Technologies Ltd fell 0.8 percent and Tech Mahindra Ltd ended 4.9 percent lower.
Mobile carriers slumped for a second day on concerns over possible high bidding prices at a spectrum auction next month after eight companies applied to bid, signalling much stronger competition than expected.
Idea Cellular Ltd fell 3.2 percent, adding to Thursday's 7.2 percent decline, while Bharti Airtel Ltd fell 1.5 percent after a 4.8 percent slump in the previous session.
Coal India shares fell 10 percent after going ex-dividend on Friday.
State-run Coal India had said on Jan. 14 it would pay an interim dividend of 29 rupees a share, or 183.2 billion rupees, in the current fiscal year ending on March 31 Reliance Industries Ltd fell 0.2 percent, giving up intraday gains of as much as 1.2 percent during the day on caution ahead of December-quarter earnings later in the day.
Reliance Industries may lag consensus operating profit forecast for the October-December quarter, Thomson Reuters StarMine's SmartEstimates shows.
However, among stocks that gained, Indian Oil Corp surged 6.1 percent after a panel of Indian ministers approved the sale of a 10 percent stake in the company to two state exploration firms on Thursday, with the aim of raising 48-50 billion rupees.