Indian shares dropped for a second straight session on Friday, with index heavyweight Reliance Industries Ltd sliding as much as 7 percent after the company's gross refining margin hit a three-and-a-half year low.
The broader NSE Nifty was down 1.37 percent at 10,309.55 as of 0545 GMT while the benchmark BSE Sensex was 1.19 percent lower at 34,367.44.
Both indexes are poised to end the week lower. Markets were shut on Thursday on account of a public holiday.
Earlier in the day, the Reserve Bank of India (RBI) hiked lenders' single borrower exposure limit for non-banking financial companies (NBFCs) which do not finance infrastructure, to 15 percent of capital funds.
"Sentiment in NBFCs is quite down. So, minor concessions by the RBI are not helping prices as market participants worry about the next default or delay and its repercussions on the already fragile mood," said Deepak Jasani, head of retail research at HDFC Securities.
Shares of Indiabulls Housing Finance and Dewan Housing Finance Corp fell 15 percent and 10 percent, respectively.
"Markets are jittery. For companies that have come out with results, there seems to be a sell-on-news mood as there is nothing to look forward to in the near term," Jasani added.
ACC Ltd and Mindtree Ltd fell after disappointing September quarter results.
Yes Bank Ltd fell over eight percent after the RBI denied another extension to its chief executive Rana Kapoor.
Asian shares slipped further after China posted its weakest economic growth since the global financial crisis, adding to market concerns about trade disputes, rising U.S. interest rates and Italy's free-spending budget.