Local stocks hovered in negative zone in early afternoon trade. At 12:28 IST, the barometer index, the S&P BSE Sensex, was down 112.43 points or 0.31% at 36,261.65. The Nifty 50 index was down 32.15 points or 0.29% at 10,873.05. Pharma shares declined. Shares of Sun Pharmaceutical Industries dropped sharply.

Volatility struck bourses in early trade as the key indices reversed initial gains and sink in negative zone. Key indices extended losses in morning trade. Stocks cut losses in mid-morning trade.

The S&P BSE Mid-Cap index was down 0.49%. The S&P BSE Small-Cap index was down 0.48%.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 843 shares rose and 1399 shares fell. A total of 133 shares were unchanged.

Pharma shares declined. Cadila Healthcare (down 2.58%), Dr Reddy's Laboratories (down 0.51%), Glenmark Pharmaceuticals (down 3.36%), Lupin (down 0.5%), GlaxoSmithKline Pharmaceuticals (down 1.12%) and Wockhardt (down 2.45%) declined. Cipla (up 0.16%) and Alkem Laboratories (up 2.15%) rose.

Sun Pharmaceutical Industries fell 9.87% after media report of a complaint by a whistleblower raised fresh concerns on the drugmaker's corporate governance. According to a media report, between 2014 and 2017, Aditya Medisales (AML) had over Rs 5800 crore of transactions with Suraksha Realty, controlled by Sun Pharma's co-promoter, Sudhir Valia. This is according to a new 172-page complaint (with documents) sent by the whistleblower on Sun Pharma to the market regulator, Securities and Exchange Board of India (Sebi).

The company has been battling corporate governance issues. In December 2018, the first complaint by whistleblower alleged that Dilip Shanghvi, his brother-in-law Sudhir Valia were part of financial irregularities with Dharmesh Doshi. Doshi was allegedly a key figure in Ketan Parekh scam of 2001.

Aurobindo Pharma shed 0.25%. Aurobindo Pharma announced the signing of a definitive agreement to acquire a portfolio of seven branded oncology injectable products from Spectrum pharmaceuticals Inc. The acquisition also brings-in an experienced branded commercial infrastructure in the US.

Acrotech Biopharma LLC (Acrotech), a wholly-owned subsidiary of Aurobindo Pharma USA Inc., which in turn a wholly-owned subsidiary of Aurobindo Pharma, will be acquiring the portfolio on a debt free and cash free basis. This acquisition is in line with the company's strategy to commercialize innovative proprietary medications. The acquisition will help Aurobindo Group to enter the branded oncology market with a range of products which are well recognized by the oncology community. Aurobindo Group will also acquire a well-established and experienced branded commercial infrastructure to continue commercializing these brands. The announcement was made after market hours yesterday, 17 January 2018.

Rallis India fell 4.09% after consolidated net profit fell 44.83% to Rs 13.76 crore on 6.97% increase in net sales to Rs 417.35 crore in Q3 December 2018 over Q3 December 2017. The result was announced after market hours yesterday, 17 January 2018.

Overseas, Asian stocks were trading higher Friday amid optimism for progress in U.S.-China trade talks. China reportedly announced its economy czar, Vice Premier Liu He, will go to Washington for talks Jan. 30-31 aimed at ending the tariff war sparked by U.S. complaints about Beijing's technology ambitions.

Japan's inflation in December came in weaker than expected. Prices rose 0.3%, down from November's 0.8%, as tumbling food costs offset a rise in energy prices.

US stocks advanced on Thursday as a published report that the United States was considering lifting tariffs on Chinese imports lifted investor sentiment. U.S. officials are reportedly considering lifting some tariffs on Chinese products in an effort to elicit more concessions from China for a bilateral trade deal and to stabilize the financial markets.

On the data front, the Federal Reserve Bank of Philadelphia's manufacturing index rose to 17.0 in January, up from 9.1 in December, the bank reported Thursday. The index reflects the health of the manufacturing sector in Pennsylvania, Delaware and New Jersey.

In Europe, investors awaited the next steps for the UK after Theresa May's government narrowly survived a no-confidence vote as she attempts to forge a path forward for the country's exit from the European Union.