Falls also tracked lower European share markets as lackluster corporate earnings reports undermined investor confidence ahead of US growth data due later on Friday.
Earnings will likely continue driving markets next week, including from Maruti Suzuki and Wipro, although investors are also awaiting the Reserve Bank of India's policy review on Tuesday.
The RBI is expected to keep India's key interest rate unchanged given inflation remains sticky. Instead, analysts see a cut in the cash reserve ratio, or the amount of deposits lenders must keep with the central bank, as the more likely outcome.
Investors are also waiting for a potential cabinet reshuffle that local media reports say could come on Sunday, although the top ministries are seen unlikely to be affected.
"Earnings have been okay for most of the index names but this market is liquidity driven and that is now drying up," said Vivek Mahajan, head of research at Aditya Birla Money.
"Now RBI policy and cabinet reshuffle would be key to set the tone for the market," he added.
India's BSE index fell 0.71 percent, or 133.29 points, to 18,625.34 points, marking its lowest close since Oct. 17. The index fell 0.3 percent for the week.
The 50-share NSE index fell 0.72 percent, or 41 points, to 5,664.30 points.
The index fell 0.35 percent for the week.
Punjab National Bank's shares dropped 6.8 percent and Indian Overseas Bank also fell 6.8 percent after both reported a net gain in non-performing assets (NPAs) in the July-September quarter.
The results in the two state-run banks hit State Bank of India, with shares ending down 1.2 percent, on concerns the country's biggest lender would also post an increase in bad loans when it reports earnings.
India's biggest private sector lender ICICI Bank fell 0.8 percent, despite posting a record net profit in the July-September period and beating estimates, as investors booked profits as part of the broader downturn in the banking sector.
Hindustan Unilever Ltd, the Indian unit of Anglo-Dutch Unilever Plc , dropped 2.08 percent as disappointment over its sales volumes offset the better-than-expected 17 percent rise in net profit.
Personal care and food products maker Dabur India Ltd fell 2.2 percent given concerns about its margins in the previous quarter.
Shares in CESC Ltd dropped 15 percent on Friday as investors questioned why the Indian power utility has agreed to buy a stake in business process outsourcing company Firstsource Solutions Ltd.
However, among gainers, shares in Mahindra & Mahindra rose 2.7 percent, extending Thursday's 3.5 percent gain after its quarterly earnings this week beat analyst estimates.
UBS also upgraded Mahindra & Mahindra to 'buy' from 'neutral' citing a "strong" outlook for profit margins.
Kingfisher Airlines Ltd rose 4.6 percent on hopes the carrier would regain its flying license after regulators took it away earlier this month.
India's air regulator said on Friday Kingfisher will use its own money as it tries to resume flying, a day after the grounded carrier persuaded striking staff to return to work.
Hindustan Construction Company Ltd shares rose 2.3 percent after the builder's July-September loss narrowed to 187.7 million rupees compared to 405.4 million rupees a year ago.