A Reuters poll of 30 economists predicted consumer price inflation (CPI) to have accelerated to 2.48 percent in January, from 2.19 percent in December.
The benchmark BSE index fell for a fourth straight session, closing 0.66 percent lower at 36,153.62.
The broader NSE index declined 0.53 percent to 10,831.4, shedding 2.15 percent over the past three sessions.
Housing Development Finance Corp Ltd and Infosys Ltd were the top drags on the NSE index, closing down 2.2 and 1.6 percent, respectively.
A Reuters poll of 30 economists predicted consumer price inflation (CPI) to have accelerated to 2.48 percent in January, from 2.19 percent in December.
If the consensus estimate is met, it would mark the sixth month in a row where inflation was below the Reserve Bank of India's medium-term target of 4 percent.
The RBI unexpectedly lowered interest rates at its monetary policy meeting on Thursday after a slide in inflation rate, with Governor Shaktikanta Das hinting at further rate cuts if inflation remained muted.
Analysts also suggested that markets were feeling the effect of tepid corporate earnings in the December quarter.
"Earnings have been mixed for Q3. Though the companies posted revenue above or in-line with consensus estimates, margins were missed by many companies," said Anupam Singhi, chief operations officer, Marketsmith India, a part of investment advisory William O'Neil India. Auto major Tata Motors Ltd reported a 269.93 billion-rupee ($3.80 billion) loss last Friday while Mahindra and Mahindra Ltd's profit shrunk 11 percent. NSE's IT index, which includes Infosys and TCS, fell 1.60 percent. Both Infosys and TCS traded 2 percent lower.
Metal and mineral stocks were among the gainers, with Hindustan Copper Ltd jumping more than 4 percent after a strong quarterly performance and Coal India Ltd advancing 2 percent ahead of its December-quarter results.