The Sensex and Nifty were trading down by nearly one per cent in line with Asian markets, heading for their first session of fall in four, as North Korea's latest nuclear test prompted investors to seek refuge in safe havens such as gold.

North Korea had on Sunday conducted its sixth and most powerful nuclear test, which it said was of an advanced hydrogen bomb for a long-range missile, marking a dramatic escalation of the regime's stand-off with the United States and its allies.

At 2.00 p.m., the 30-share BSE index Sensex was down 274.15 points or 0.86 per cent at 31,618.08 and the 50-share NSE index Nifty was down 92.6 points or 0.93 per cent at 9,881.80.

All BSE sectoral indices were trading in the negative zone. Among them, realty index plunged 2.35 per cent, followed by infrastructure 1.5 per cent, IT 1.37 per cent and power 1.35 per cent.

Top five Sensex losers were Adani Ports (-2.67), Infosys (-2.13%), Tata Motos (-1.91%), Hero MotoCorp (-1.62%) and Kotak Bank (-1.59%), while the major gainers were Coal India (+3.06%), ONGC (+0.97%), Reliance (+0.23%), NTPC (+0.12%) and Maruti (+0.08%).

Japan's Nikkei closed about 1 per cent lower, while MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.8 percent.

“The markets are struggling to go up because of North Korea tensions,” said Deven Choksey, promoter, KR Choksey.

Technical charts showed the NSE index broke out of a triangle formation last week, suggesting consolidation was complete and a rally might resume.

“Banking stocks such as HDFC Bank are a bit highly valued and are seeing some corrections,” Choksey said.

HDFC Bank Ltd and Housing Development Finance Corp Ltd were down for a second straight session, trading 0.9 per cent and 0.7 per cent lower, respectively.

The Nifty Auto index fell 0.8 per cent after gaining nearly 2 per cent on Friday when most automakers reported August sales numbers. Hero MotoCorp Ltd, which reported a 10 per cent rise in sales, was trading 1.6 per cent lower.

Meanwhile, Coal India Ltd surged as much as 2.9 per cent after the miner had said on Friday that the company along with its units produced 37.63 million tonnes of coal in August, beating its target of 36.96 million tonnes.