Consequently, the key Indian indices closed the day's trade on a flat note with a negative bias, as heavy selling pressure was seen in capital goods, information technology (IT) and banking stocks.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) slipped by 19.65 points, or 0.23 per cent, to 8,572.55 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 27,882.75 points, closed at 27,782.25 points -- down 53.66 points, or 0.19 per cent, from the previous close at 27,835.91 points.
The Sensex touched a high of 27,935.88 points and a low of 27,696.99 points during the intra-day trade.
The BSE market breadth was tilted in favour of the bears -- with 1,597 declines and 1,049 advances.
On Thursday, both the key indices had closed in the red as volatility was induced by futures and options (F&O) expiry, coupled with negative global cues.
The barometer index had plunged 224.03 points, or 0.80 per cent, while the NSE Nifty slipped by 58.10 points, or 0.67 per cent.
Initially on Friday, the benchmark indices opened on a positive note. However, later in the day, negative cues from the global markets led the indices to cap gains.
The markets traded with apprehension as caution prevailed ahead of US Fed Reserve Chair Janet Yellen's speech on Friday -- a pointer to a possible interest rate hike, which can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.
Moreover, the domestic markets traded with caution due to lack of earnings in economic data, which is required to boost investor sentiment and drive the markets.
Besides, lower crude oil prices and reports of below average rainfall also added to the downward trajectory.
"Lack of earnings in economic data from the domestic markets has led to caution which has dominated the markets in the past few days," Manish Hathiramani, Proprietary Trader and Technical Analyst at Deen Dayal Investments, told IANS.
"On the global front, investors and traders are focusing on the upcoming speech by Janet Yellen, which will give some clarity on the direction of monetary policy."
The rupee stayed firm at 67.06 against a US dollar -- depreciating by only a paisa -- from its previous close of 67.05 on Thursday.
"FII (foreign institutional investors) selling on consecutive days ensured that stocks remained tentative and reluctant to push higher. Global markets were no different, especially ahead of Fed meeting," said Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services.
"However, the value buying that has held benchmark indices from slipping beyond the month low, hints at some deal of complacency regarding a potential Fed rate hike soon."
In terms of investments, provisional data with exchanges showed the (FIIs) purchased stocks worth Rs 341.35 crore and the domestic institutional investors (DIIs) divested scrips worth Rs 266.43 crore.
Sector-wise, the S&P BSE capital goods index plunged by 184.38 points, the IT index declined by 131.54 points, and the banking index fell by 130.61 points.
On the other hand, the S&P BSE consumer durables index surged by 176.74 points, the automobile index rose by 131.16 points, and the oil and gas index gained 75.78 points.
Major Sensex gainers during Friday's trade were: Tata Motors, up 2.01 per cent at Rs 503.65; Gail, up 1.61 per cent at Rs 379.20; Asian Paints, up 1.51 per cent at Rs 1,124; Reliance Industries, up 1.44 per cent at Rs 1,027.70; and Cipla, up 0.88 per cent at Rs 568.
Major Sensex losers were: Wipro, down three per cent at Rs 489.95; Larsen and Toubro (L&T), down 2.02 per cent at Rs 1,427.85; Adani Ports, down 1.75 per cent at Rs 257.55; Infosys, down 1.52 per cent at Rs 1,020.75; and State Bank of India (SBI), down 1.34 per cent at Rs 246.70.
