The Sensex and Nifty slumped nearly 1.3 per cent, dragged by by financials after the country raised the limit of bonds that can be issued under the market stabilisation scheme, while the sentiment was also subdued ahead of US payrolls expected later in the day.
Global sentiment was also muted ahead of a referendum in Italy over its constitution, and the Reserve Bank of India's policy review next week.
The 30-share BSE index Sensex ended lower by 329.26 points or 1.24 per cent at 26,230.66. The benchmark ended 0.33 per cent lower for the week.
Similarly, the 50-share NSE index Nifty dropped 106.1 points or 1.3 per cent at 8,086.80. It was down 0.34 per cent for the week.
Among BSE sectoral indices, consumer durables index fell the most by 2.32 per cent, followed by FMCG 1.62 per cent, auto 1.61 per cent and capital goods 1.51 per cent.
Major Sensex losers were Asian Paints (-3.57%), Maruti (-3.44%), Tata Motors (-3.37%), Adani Ports (-3.13%) and HDFC (-2.35%).
Auto makers fell after they reported monthly domestic sales in November plunged from a month earlier as an intense cash crunch brought a recent recovery in consumer demand to a screeching halt.
Telecom companies continued to languish after Reliance Industries on Thursday extended an offer of free data and voice services by its telecoms unit, Jio, raising concerns about the cut-throat competition in the sector.
Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 402.62 crs yesterday, as per provisional data released by the stock exchanges.
Asian markets fell on global uncertainties as investors adopted a wait-and-watch mood. The US Labour Department will release later today its closely watched monthly employment report for November.
A report by SMC Global said: "Asian markets declined tracking weak US stocks on Thursday. Concerns over the US economy and stability in Europe kept the US dollar in check. Oil prices soared above the $50 per barrel mark, while gold too made a comeback. US equities closed mostly lower on Thursday as declines in tech offset a rally in financial stocks, while investors digested economic data and rising oil prices. US construction spending climbed 0.5 per cent to an annual rate of $1.173 trillion in October from the revised September estimate of $1.167 trillion. The increase in total construction spending came as spending on public construction surged up by 2.8 per cent to a rate of $286.8 billion in October from $279.1 billion in September."