Investors seem to be cautious after the US Federal Reserve left interest rates unchanged on Wednesday but signalled it still expects one rate hike by the end of the year despite recent weak US inflation readings.
MSCI's broadest dollar-denominated index of Asia-Pacific shares outside Japan was down 0.5 percent.
The Sensex touched a high of 32,524.11 points and a low of 32,358.63 points during intra-day trade.
Small-cap and mid-cap stocks moved in tandem with the benchmark indices, weakening by up to 0.51 per cent.
The BSE market breadth was bearish with 1,311 declines and 1,293 advances. Asian markets logged healthy gains and European shares jumped to a higher opening, tracking Wall Street hitting fresh highs on Friday ahead of this week's USA interest rate call and cooling North Korea tensions, traders said.
The 30-share BSE Sensex was down 30.47 points at 32,370.04 while the 50-share NSE Nifty held its psychological 10,100 level, falling 19.25 points to 10,121.90. Japanese financial markets are closed for a public holiday today. "So, this can impact in the short-term but unlikely in the long-term, as seen by the appreciation of INR (Indian rupee) in spite of selling by FII", Nair added.
The Indian rupee traded nine paise down at 64.08 to the United States dollar at 10.48 am.
Meanwhile, domestic institutional investors (DIIs) bought shares worth a net Rs 125.55 crore while foreign portfolio investors (FPIs) bought equities of Rs 418.86 crore on Friday, showed provisional data.
"Over 120 stocks hit fresh 52-week highs, helping them multiply investors' wealth".
The BSE realty index was the biggest drag, down 2.28 per cent. Consumer durables, PSU and banking indices too weighed while healthcare and IT indices ended higher.
Major Sensex gainers on Thursday were: Dr. Reddy's Lab, up 7.47 per cent at Rs 2,486.45; Cipla, up 4.04 per cent at Rs 591.45; Lupin, up 3.02 per cent at Rs 1,032.45; Sun Pharma, up 2.59 per cent at Rs 519.55; and Tata Consultancy Services, up 1.34 per cent at Rs 2,525.85.