The BSE Sensex fell to a three-week low on Thursday as investors took gains off the table, continuing to book in recent outperformers as the upcoming quarterly reporting season is expected to be weak.
After surging 10.8 percent in March, the NSE Nifty is down 2.1 percent so far this month, after the Reserve Bank of India cut interest rates by 25 basis points as widely expected, and not the 50 bps cut some investors had hoped for.
Markets are now focused on January-March earnings reports amid worries companies continued to suffer due to lacklustre economic growth and weak global demand.
Next week, cement makers ACC Ltd <ACC.NS> and Ambuja Cements Ltd <ABUJ.NS>, and software services provider Infosys <INFY.NS> are due to report their earnings results.
"On the earnings front, it's not like we are going to see a robust turnaround. So from a short to medium-term perspective, for those who have low risk appetite, I think it is prudent to book profits," said Gaurang Shah, vice president at Geojit BNP Paribas.
The broader Nifty was 0.58 percent lower at 7,569.10 by 0801 GMT, after falling as much as 0.95 percent earlier in the session to its lowest level since March 18.
The benchmark BSE Sensex was 0.49 percent down at 24,777.47, after declining as much as 1 percent earlier to its lowest level since March 17.
Indian share markets will remain open for trading on Friday, although currency and debt trading will be shut for a market holiday.
Lenders, which had surged 16 percent in March, were down. Kotak Mahindra Bank <KTKM.NS> fell 1 percent, while ICICI Bank <ICBK.NS> dropped 0.3 percent.
Shares of Tata Power <TTPW.NS> and Adani Power <ADAN.NS> slumped 3 percent each after CNBC TV 18 reported the Appellate Tribunal for Electricity on Thursday struck down a 2014 order by the power regulator CERC that had granted compensatory tariff to the two companies. (http://bit.ly/1SBS68j)
Auto maker Maruti Suzuki <MRTI.NS> fell 2.8 percent, as the yen hit a fresh 17-month low against the dollar in Asian trade. Every 1 percent appreciation in the yen affects 15-20 bps of operating margin for Maruti Suzuki, according to broker HSBC.
HDFC Ltd <HDFC.NS> dropped 2 percent after the private housing lender said it would set aside 4.5 billion rupees ($67.66 million) as special provision for the quarter ended March 31.
Among the gainers, Future Retail <FURE.NS>, which operates Big Bazaar and Home Town retail chains, rose 2 percent after asset management firm SSG Capital said it would buy 40 percent stake in Future Retail's logistics unit Future Supply Chain.