Reuters Market Eye - The BSE Sensex and the Nifty are down around 0.5 percent each, heading for a fourth consecutive day of decline. It would also mean domestic shares have retreated in each trading session of 2014.
Losses track lower Asian shares after growth in China's services sector slowed sharply last month, raising concerns about the pace of recovery in the world's second-largest economy.
Foreign institutional investors sold 6.08 billion rupees worth of index futures on Friday, dampening sentiment.
Overseas investors also sold shares worth 180 million rupees on Friday, provisional exchange data shows.
At home, the HSBC Services Purchasing Managers' Index, compiled by Markit, fell to 46.7 in December from 47.2 in November as new orders dwindled, although firms hired at their fastest pace in five months.
Among shares of blue chips, ICICI Bank falls 2.2 percent, while Reliance Industries is down 1.3 percent.
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(Reporting by Abhishek Vishnoi)