The BSE Sensex fell on Friday, failing to extend their third weekly gains, as some blue chip shares such as Sun Pharmaceutical were hit by profit-taking after marking their highest level since November 2010 earlier in the week.
Shares gained nearly 5 percent in the last three weeks, benefiting from a return of global risk appetite as poor U.S. data has pushed back expectations of any tapering of the Federal Reserve's monetary stimulus until 2014.
Foreign investors have continued to buy local shares, remaining net buyers for a 15th consecutive session. Provisional exchange data showed a net purchase of 9.91 billion rupees on Thursday, bringing the total to nearly 125 billion rupees during that period.
Traders expect volatility in coming days as concerns over another interest rate hike by the Reserve Bank of India in its policy review on October 29 and U.S. Federal Reserve policy meeting outcome on October 30 take centre stage amid expiry of the October derivative contracts.
Although earnings of drug exporters including Lupin Ltd (LUPN.NS) are expected to provide a relief.
"It is going to get volatile as expiry of derivatives contracts and RBI policy are coming at a time when we are almost virtually at lifetime highs," said Vivek Mahajan, head of research at Aditya Birla Money.
The Sensex fell 0.2 percent, or 41.91 points, to end at 20,683.52, also marking a weekly fall of 0.95 percent, snapping a three-week winning streak.
The Nifty fell 0.32 percent, or 19.45 points, to end at 6,144.90, marking its fourth consecutive day of falls, also ending 0.7 percent lower for the week.
However, Deutsche Bank raised its December 2013 target for the Sensex to a record high at 22,000 points from 21,000, saying investor pessimism earlier this year was receding amid positive developments such as a good monsoon.
Among blue chip shares, Sun Pharmaceutical Industries Ltd (SUN.NS) fell 1.7 percent, while Tata Motors Ltd (TAMO.NS) ended 0.8 percent down.
ITC Ltd (ITC.NS) shares fell 0.8 percent on concerns over the company's volume growth, dealers said.
The company said its September-quarter net profit rose 21.7 percent to 22.31 billion rupees.
Hindustan Unilever Ltd (HLL.NS) also lost 2.6 percent a day ahead of its July-September results.
Bharti Airtel Ltd's (BRTI.NS) shares fell 1.8 percent after rival Idea Cellular Ltd (IDEA.NS) on Thursday reported lower voice volumes in the July-September quarter from the previous quarter. Idea shares also ended down 3 percent.
Idea shares also ended 1.9 percent lower.
Wockhardt Ltd (WCKH.NS) shares fell 1.1 percent after the company posted its smallest profit in six quarters, hurt by curbs on shipping medicines to the United States and Britain from one of its factories after their health regulators identified deficiencies at the plant.
GAIL (India) Ltd (GAIL.NS) fell 2.4 percent after its July-September profit fell by 7 percent to 9.16 billion rupees.
However among stocks that gained, ICICI Bank Ltd (ICBK.NS) ended 0.13 percent higher after India's largest private-sector lender by assets, beat analyst estimates by posting quarterly profit gain of around 20.1 percent, as an appetite for cars and homes led to higher credit growth.