Shares edged lower on Friday, dragged by banks and metal stocks, ahead of a major U.S. jobs report that will likely feed into the Federal Reserve's rate hike strategy.
The NSE Nifty 50 index .NSEIwas down 0.3% at 17,274.90 as of 0512 GMT, while the S&P BSE Sensex .BSESN dropped 0.34% to 58,034. The rupee sank to a new low against the dollar.
The World Bank trimmed India's growth forecast for this financial year by a full percentage point, as rising commodity prices and debt-trouble hit economies in South Asia.
Meanwhile, the monthly U.S. jobs report on Friday will give a fresh indication of inflation pressures in the country.
"Investors have been looking to pick up bargains. But, as prices move higher there is a visible disinclination to chase. One among major reasons being the talks around aggressive Fed rate hike decision," said Anand James, chief market strategist at Geojit Financial.
"Non-farm payrolls data due later brings a very important perspective to Fed's plans. That's also keeping the risk appetite in check," said James.
U.S. Federal Reserve officials have showed no intention of backing down from the most aggressive rate hike campaign in decades, emphasising that the inflation fight was ongoing.
"We are also seeing other inflation trends. Commodities, which have been falling for the last few months is likely seeing a temporary bottom. There are some signs of firmness in metals as well oil due to supply side tightness," James said.
Crude oil prices held near their three-week high on Friday, weighing on the sentiment as India is one of the largest importers of the commodity and high prices have a direct impact on inflation. O/R
The Nifty bank index .NSEBANK lost 0.9%, while the energy metals index fell 1.1%.
Shares of Titan Co TITN.NS rose 5.3% to topthe Nifty 50 after the jewellery maker said overall second quarter sales rose 18% year-on-year.
Bharat Petroleum Corp BPCL.NS dropped 1.6% and was the top Nifty 50 loser.