Indian shares snapped a seven-day winning streak, weighed down by a 3.1 per cent decline in Reliance Industries and as the sentiment for blue-chips was hit after foreign investors sold index derivatives.

Reliance Industries fell as much as 3.4 per cent after Delhi police arrested seven people, including government employees and a former journalist, whom they said ran a scam to steal official documents from the oil ministry and sell them to energy consultants and large private companies.

Reliance shares fell 3.1 per cent and were the biggest drag on indexes.

Still, analysts said they expected shares to turn firmer next week ahead of the fiscal 2015/16 budget to be unveiled on February 28 and as metal and cement companies bid aggressively for coal blocks in the country's first auctions to sell mines, raising hopes about the fiscal deficit.

"In the near term, market would get a boost due to auction money," said Deven Choksey, managing director of K R Choksey Securities.

The benchmark BSE index plunged 230.86 points or 0.78 per cent at 29,231.41, while the broader NSE index fell 67.1 points or 0.75 per cent at 8,828.20. Both indexes are still on track to post their second consecutive weekly gain.

Blue-chips such as ICICI Bank declined after overseas funds sold index derivatives worth $132.75 million on Thursday, according to NSE data.

ICICI Bank lost 2.2 per cent, while Housing Development and Finance Corp fell 1.5 per cent.

Software services exporters fell on lingering concerns about waning overseas interest in the sector. A report by Bank of America-Merrill Lynch showed some of the IT companies were among the top-10 underweight stocks for foreign institutional investors.

Among IT stocks, Infosys fell 1.82 percent and Wipro lost 1.4 per cent.

Among BSE sectoral indices, oil & gas index fell the most by 1.79 per cent, IT 1.24 per cent, TECk 1.21 per cent and infrastructure 0.7 per cent. On the other hand, realty index was the star-performer and was up 0.91 per cent, followed by FMCG 0.75 per cent, consumer durables 0.25 per cent and PSU 0.19 per cent.

European shares were steady on Friday morning, with a benchmark index hovering just below a seven-year high, ahead of a meeting of euro zone finance ministers on Greece’s bailout programme.

Japanese stocks rose to a fresh 15-year high on Friday with the dollar boosted by upbeat US data, but continuing uncertainty over the Greek debt negotiations weighed on the euro.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent, with many of the regions' markets were closed for the Lunar New Year holiday, including China, Malaysia, Singapore, Taiwan and South Korea.

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