Markets closed in the red with the Sensex down 160 points at 17381 and the Nifty shed 59 points to end the session at 5256(provisional)
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(Updated at 14:44 hrs)
Markets were trading near their day lows in late noon trades on selling pressure across the board dragged by index heavyweights.
At 2:34pm the Sensex was down 174 points at 17,367 after touching an intra-day low of 17,337 and the Nifty declined 66 points to 5,249 after touching a low of 5,239 so far.
India's economy grew at a higher-than-expected 5.5% in the quarter ending in June, against analysts' forecasts of 5.3%, government data showed on Friday.
The manufacturing sector grew an annual 0.2% during the quarter, while farm output rose 2.9%, the data showed. In the quarter ending in March, economic growth was at 5.3%.
On the global front, Japan's Nikkei average fell to a four-week closing low on Friday as resources-related shares remained under pressure on concern over slowing China growth, while Sharp Corp sank on uncertainty over a tie-up with Taiwan's Hon Hai Precision Industry. The Nikkei ended down 1% while the Hang Seng and Shanghai Composite were down 0.3% each.
European stocks pared early losses and turned positive on Friday morning, halting a sharp three-day retreat, led by gains in Italy's blue-chip index. The CAC-40, DAX and FTSE-100 0.3-0.5% each.
All sectoral indices on the BSE were trading in negative terrain with Metal index down over 2% followed by Realty, Auto, Power, FMCG, Capital Goods, IT and Bankex down between 1.1-1.9% each.
Index heavyweight Reliance Industries was down 1.3% at Rs 772. Citigroup has downgraded Reliance Industries to "neutral" from "buy", but raises its target price to 847 rupees from 818 rupees.
ICICI Bank was down 1.7% on profit taking. Meanwhile, Nomura has upgraded ICICI Bank to "buy" from "neutral" saying the Indian lender was "better shielded from the asset quality deterioration" in the banking sector, and expects return on equity to increase by 15 percent by fiscal 2013.
FMCG shares which had gained in the previous few sessions also witnessed profit taking. Hindustan Unilever was down 2% while ITC slipped 1%.
Software exporters were down ahead of US Fed Chairman Ben Bernanke's address to the annual Jackson Hole meeting of central bankers later today. TCS was down 1.6% while Infosys and Wipro slipped 0.6% each. These software firms earn most of their revenues from exports to the US.
Auto shares witnessed profit taking on concerns that August sales growth would continue to remain subdued and demand would further slowdown on account of high interest rates on auto loans and rising fuel prices. Tata Motors, Maruti suzuki, Bajaj Auto, Hero MotoCorp and Mah & Mah were down between 0.2-2.3% each.
Capital goods shares also witnessed selling pressure as manufacturing segment witnessed dismal growth during the Apr-Jun quarter. During the quarter ended June 30, the manufacturing sector grew marginally by 0.2%, against 7.3% growth in the same period of 2011-12, according to the official data released today. BHEL was down 3.3% while L&T slipped 1%.
Metal shares were down on concerns of that demand would slowdown after China's factory output rose to its slowest rate in eight months in July. China is the world's largest metal consumer. Sterlite, Tata Steel, Hindalco were down 2-3% each.
The market breadth breadth was weak with 1,462 losers and 1,191 gainers on the BSE.