Fears of deficient monsoon also affected traders after the India Meteorological Department said monsoon rains were 19 percent below normal in the week ending July 13.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the week at 18,561.92 points, down 1.57 percent or 296.12 points compared to last Friday's close at 18,858.04 points.
At the National Stock Exchange, the 50-scrip S&P CNX Nifty closed 0.59 percent or 33.45 points up at 5,660.65 points Friday.
Markets also largely braved the triple bombings in the commercial capital of the country, as investors went about their daily routine.
Broader markets too edged lower, while some mid-valued scrips managed moderate gains.
Foreign institutional investors were net buyers to the tune of $163.74 millon, according to data available with the Securities and Exchange Board of India. Indian equities markets have been attracting a lot of interest from foreign funds with FIIs having bought stocks worth over $1.36 billion from June 30 to July 15.
On a weekly basis, there were only two gainers on the Sensex: ONGC (up 0.4 percent) and Reliance Industries (up 0.2 percent).
Among top losers on the benchmark were: Infosys (down 9 percent), Hindalco (down 9 percent), Jaiprakash Associates (down 7.1 percent), Tata Steel (down 5.4 percent) and HDFC (down 4.2 percent).
Global markets ended mostly in the red with investors concerned that credit rating agency Standard & Poor could downgrade the rating of US sovereign debt. Towards the end of the week, markets were also edgy as nine European banks failed stress tests conducted by the European Central Bank.
The Nikkei of the Japanese stock exchange ended 1.61 percent lower on a weekly basis at 9,974.47 points.
The Hang Seng of the Hong Kong stock exchange ended 3.74 percent lower at 21,875.38, while the Shanghai Composite index of China moved up 0.8 percent to close at 2,820.17 points.
European bourses ended in the red, while the US markets managed to hold on to some of their intra-week highs even after some profit booking.
The FTSE of UK lost 2.45 percent at 5,843.66 points, while the German DAX slipped 2.47 percent at 7,220.12 points.
The French CAC 40 fell 4.78 percent on a weekly basis to end at 3,726.59 points.
In the US, the S&P 500 index shed 2.06 percent to close the week at 1,316.14 points, while the Dow Jones Industrial Average fell 1.4 percent during the week to end at 12,479.73 points.
The tech-heavy Nasdaq slipped 2.45 percent at 2,789.8 points.