"Everyone is sitting on their cash and not taking fresh positions. I think the market could swing 200 points either way from here," said Devang Shah, vice-president institutional sales at Sushil Finance.
India's coalition government will present its second budget a week from Monday, in what analysts expect to be an expansionary package, focused on farms, healthcare, education and sanitation along with major tax reforms.
At the start of the week, the Mumbai index set a new all-time high of 6,719.17, buoyed by budget hopes. It also hit a new closing high of 6,679.33 points, but then slipped 1.4 percent.
Foreign fund inflows, a key contributor to the booming share market, were weak on Friday, traders said. Foreign institutional investors have bought over $1.3 billion shares so far in February - topping their investments for the whole of December 2004.
Indian bonds, however, ended higher as dealers cashed in on two days of gains after government data showed wholesale prices rose 5.01 percent in the 12 months to February 5, slowing from the previous week's 5.25 percent due to lower prices of agricultural produce.
The yield on the 10-year benchmark bond closed 1 basis point lower at 6.4943 percent, but well up from a session trough of 6.4537 percent.