At 12:46 pm, the Sensex traded 168 points - or 0.42 per cent - lower at 39,573 while the Nifty was down 59 points - or 0.49 per cent - at 11,855.

Top laggards on the 50-scrip benchmark index at the time were Zee Entertainment, Yes Bank, IndusInd Bank, Bharti Airtel, Kotak Mahindra Bank, Sun Pharma, Tata motors, Bajaj Auto and UltraTech Cement, down between 1.2-4.5 per cent each.

Market breadth favoured declines with 732 stocks trading higher against 1,027 that traded lower on the BSE. On the National Stock Exchange (NSE), 675 stocks advanced while 916 declined in morning deals.

The Nifty Pharma index - comprising pharmaceutical stocks - fell as much as 1.22 per cent. Besides Dr Reddy's, prominent losers in the sectoral index included Aurobindo Pharma and Divi's Laboratories - which fell as much as 2.21 per cent and 2.14 per cent in intraday trade respectively.

On the macro economic front, wholesale inflation eased to 2.45 per cent in May from 3.07 per cent in April, news agency Press Trust of India reported on Friday.

Earlier this week, official data showed consumer inflation picked up to a seven-month high of 3.05 per cent in May. However, Wednesday's data still meant inflation stood well below the central bank's medium-term target of 4 per cent for a tenth month in a row, fuelling hopes of further monetary easing going forward.

Equities in other Asian markets were Asian stocks were under pressure with MSCI's broadest index of Asia-Pacific shares outside Japan edging down 0.2 per cent. However, it was headed for a gain of nearly 1 per cent for the week.

Chinese data due later in the day could provide more clues on how heavily the US-China trade war is weighing on the economy. The Shanghai Composite Index dipped 0.1 per cent, Australian stocks added 0.1 per cent and Japan's Nikkei climbed 0.25 per cent.