Nifty ended up 65 points at 4,779.
The 30-share Sensex provisionally ended at 15,485.40 down 351.07 points or 2.2% and the 50-share Nifty ended at 4,646.35 down 100 points or 2.1%.
The National Stock Exchange's 50-share S&P CNX Nifty closed down 37 points at 4,763.
The market breadth was weak. Out of 2902 stocks traded on the BSE, there were 1116 advancing stocks as against 1660 declines.
The market breadth was weak. Out of 2873 stocks traded on the BSE, there were 1311 advancing stocks as against 1446 declines.
The market breadth was negative. Out of 2,855 stocks traded on the BSE, there were 1086 advancing stocks as against 1,642 declines.
Overnight, in the US markets, fear returned to Wall Street.
The BSE benchmark index weakened by 295 points at 19,091 and the Nifty lost 95 points to close at 5,729.
With the impending corporate earnings season, the markets were upbeat, with analysts expecting the Q4FY11 results to outperform the previous quarter.
The benchmark indices surged by as much as 9% during the past week till Thursday to post their highest returns in 21 months, buoyed by the upbeat sentiment on the global market front.
Following news of mounting worldwide dissent against Libya, Asian markets opened on a weak note, and effects were also felt on the Indian bourses.
While the IT stocks traded firm since the start of the day, the BSE IT index soared to a 10-year high.
Analysts said that there is some amount of decoupling between India and the rest of world backed by strong growth momentum.
The Nifty ended up 15 points at 5,394.
Markets exhibited weakness throughout the day on negative cues from Asian and European markets. Weakness in banking stocks, along with metal and realty saw the markets extend losses in late noon trades.
Markets slumped in late-noon trades to end near day's low.
The NSE Nifty has ended at 5,124, down 23 points.