After its biggest single-day rally in over 5 years in Thursday's trade, the benchmark BSE Sensex fell over 120 points to slip below the 28,000 level in early trade on Friday on profit-booking by participants despite the country's trade deficit falling to a 10-month low in December.
Besides, discouraging third quarter earnings by TCS and a weak trend in global markets also dampened the sentiments.
The 30-share barometer fell by 120.18 points, or 0.43%, to 27,955.37 with stocks of realty, oil and gas, IT, metal, banking, auto, and FMCG sectors declining the most.
The gauge had posted its biggest single-day gain of 728.73 in Thursday's trade after RBI governor Raghuram Rajan sprang a surprise by cutting interest rates by 0.25% to 7.75 to boost growth.
Also, the National Stock Exchange index Nifty was down by 38.95 points, or 0.46%, to 8,455.20.
Brokers said apart from profit-booking in Thursday's gainers, a weak trend at other Asian markets, tracking overnight losses at the US markets following a surprise move by the Swiss central bank to strengthen its currency, influenced sentiments.
Meanwhile, India's trade deficit declined to a 10-month low of USD 9.43 billion in December, mainly on account of falling imports due to slump in crude prices.
Stocks of India's largest software exporter TCS fell 2.01% to Rs 2,493.80 after the company reported a marginal 0.1% slide in its net profits at Rs 5,328 crore for the third quarter of this fiscal.
Among other Asian markets, Hong Kong's Hang Seng was trading 0.63% lower, while Japan's Nikkei plunged 2.81% in early trade.
The US Dow Jones Industrial Average ended 0.61% lower in Thursday's trade.