During the week, the Sensex fell 1,216.89 points – this year's biggest weekly drop.
After rising to the day's high of 29,183.76 in morning trade following passage of Insurance Bill in Parliament, the Sensex slipped into the negative zone. As participants focussed on retail inflation that rose to three month high of 5.37 percent in February, up from 5.19 percent in January, rate-sensitive shares were hit.
As selling picked up pace, the Sensex touched a low of 28,448.48 before ending at 28,503.30, down 427.11 points, or 1.48 percent. The gauge had gained over 271 points in Thursday's session on hopes of passage of Insurance Bill.
"The uptick in food inflation could continue into March with rain disruptions over last month causing some short term flare ups....given the limited room to manoeuvre and RBI's challenging task of taking CPI inflation down to 4 per cent by early 2018, the central bank can ill afford to cut policy rates aggressively from here," said Pranjul Bhandari, Chief India Economist, HSBC.
Markets had opened on a strong footing with  Sensex and Nifty regaining 29,000 and 8,800-mark respectively. Better-than-expected factory output, which grew 2.6 percent in January, aided sentiments but inflation played spoilsport.
The NSE Nifty, which breached the 8,800-level to touch the day's high of 8,849.75 at the outset, succumbed to broad-based selling. It then touched a low of 8,631.75 before settling down 128.25 points, or 1.46 percent, at 8,647.75.
Major losers that dragged down the key indices were BHEL, L&T, Bajaj Auto, Wipro, Axis Bank, Hindalco, ICICI Bank, Sun Pharma, Tata Steel, SBI, Tata Power and Sesa Sterlite. Among 30 Sensex components, 27 stocks ended down while Bharti Airtel, ONGC and NTPC gained.
Sectorally, the BSE Capital Goods index suffered the most by falling 2.57 percent, followed by FMCG index (1.94 pc), Banking index (1.93 pc), Power Index (1.81 pc), Auto index (1.63 pc), Metal index (1.28 pc) among others.
The BSE Small Cap index ended 1.54 percent lower while Mid-cap index shed 1.37 percent.
Bucking the trend, DLF scrip zoomed over 5 percent after the SAT on Friday quashed a SEBI order that had barred the company from capital markets for 3 years.
Provisional data showed Foreign Portfolio Investors bought shares worth net Rs 733.09 crore on Thursday.

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