The 30-share index ended the day at 28,797, down 248.03 points, while broad-based 50-share index quoted 8,866, down 85.80 points at close.Asian markets fell after North Korea said it had conducted its fifth nuclear test, hours after seismic monitors detected a blast near the reclusive state's nuclear test site.
Global market sentiment took a hit after ECB President Mario Draghi said on Thursday that the central bank was looking at options to continue its money-printing programme, but maintained the March end-date for asset purchases.
Investors back home also booked profits after shares closed at their highest in 18 months on Thursday as foreign institutional investors bought shares worth $6.43 billion so far this year.
"North Korea news is having some bit of implication on our markets but its not causing any immediate selloff. Given the higher levels at which Indian markets were trading, it was mouth-watering to take some money off the table," said Gaurang Shah, vice president, Geojit BNP Paribas Financial Services.
Private sector lender Yes Bank fell 4 per cent, extending its losses from Thursday, after it deferred an up to $1 billion share sale to institutions.
Steel Authority of India dropped 5.68 per cent after the state-owned steelmaker said on Thursday that its June-quarter net loss widened to 5.36 billion rupees.
ONGC stock was the top gainer on Sensex and settled the day 3.31 per cent after the company said it is in talks to buy a stake in GSPC's KG basin block and has hired US-based consultant Ryder Scott to assess natural gas reserves.
(With inputs from Reuters)