Axis Bank was the top laggard in the Sensex pack, plunging more than 5 per cent, followed by HDFC, Bajaj Finance, ICICI Bank, Tata Steel, Bajaj Auto, HDFC Bank and IndusInd Bank.
On the other hand, M&M, Infosys, Asian Paints, UltraTech Cement and Tech Mahindra were among the gainers.
NSE Nifty settled 67 points or 0.74 per cent down at 9,039.25.
Benchmark indices snapped their three-session winning streak on Friday as the RBI's surprise rate cut and other steps to prop up the coronavirus-hit economy failed to enthuse investors.
Banking and financial stocks led the decline after RBI's extension of moratorium on loan repayments stoked NPA fears.
After falling over 450 points during the day, the 30-share BSE Sensex ended 260.31 points or 0.84 per cent lower at 30,672.59.
The broader NSE Nifty settled 67 points or 0.74 per cent down at 9,039.25.
During the week, the Sensex declined 425.14 points or 1.36 per cent, while the Nifty fell 97.6 points or 1.06 per cent.
Axis Bank was the top laggard in the Sensex pack on Friday, plunging 5.65 per cent, followed by HDFC, Bajaj Finance, ICICI Bank, Bajaj Auto, Tata Steel, IndusInd Bank and HDFC Bank.
RIL closed marginally lower, despite announcing sale of 2.32 per cent stake in Jio Platforms to US private equity giant KKR for Rs 11,367 crore -- the fifth deal in four weeks that will inject a combined Rs 78,562 crore in the oil-to-telecom conglomerate.
On the other hand, M&M, Infosys, Asian Paints, UltraTech Cement and Tech Mahindra were among the gainers, climbing up to 4.46 per cent.
Earlier on Friday, the Reserve Bank of India (RBI) unexpectedly slashed benchmark interest rates for the second time this year to revive the economy.
The repo rate was cut by 40 basis points to 4 per cent and the reverse repo rate was decreased to 3.35 per cent from 3.75 per cent.
The central bank also extended the three-month moratorium on loan repayments till August 31 and raised the limit on banks' group exposure to companies.
"However, RBI has not announced any relief on the restructuring of loans to address the risk of rising asset quality issues in the banking sector which has come as a disappointment for the equity markets," said Gaurav Dua, Sr VP, Head Capital Market Strategy & Investments, Sharekhan by BNP Paribas.
The central bank also said the impact of COVID-19 is more severe than anticipated and the GDP growth during 2020-21 is likely to remain in the negative territory.
BSE finance, bankex, metal, realty and power indices fell up to 3 per cent, while IT, teck, healthcare and auto ended in the green.
Broader BSE midcap and smallcap indices shed up to 0.83 per cent.
On the global front, Hong Kong led a sell-off across Asian equities after China introduced proposals to enact a national security law for the city.
Hong Kong's Hang Seng index dived more than 5 per cent, its biggest single-session fall since 2015, while bourses in Shanghai, Tokyo and Seoul also ended significantly lower.
International oil benchmark Brent crude futures slipped 4.38 per cent to $34.48 per barrel.
India witnessed its biggest single-day spike in COVID-19 cases, with 6,088 people testing positive, taking the tally to 1.18 lakh.
The death toll rose to 3,583, according to the health ministry.
Globally, the number of cases linked to the disease has crossed 51 lakh and the death toll has topped 3.32 lakh.