All the sectoral indices traded in line with the benchmark indices and ended lower.
Bears have maintained an upperhand for major part of the session on Monday as benchmark indices ended at fresh 2018 lows amid weak global cues. Investors looked for cues from the two-day Federal Reserve meeting due later in the week.
Continued ruckus at both Rajya Sabha and Lok Sabha for 11th consecutive day, political uncertainties and widened current account deficit in the December quarter also weighed on investor sentiment.
Equity benchmarks ended at lowest closing levels since December 6, 2017. The 30-share BSE Sensex was down 252.88 points or 0.76 percent at 32,923.12.
The 50-share NSE Nifty closed below the 200-DMA, falling 100.90 points or 0.99 percent to 10,094.30, weighed by banking & financials, metals, technology and oil stocks.
"Indian stock markets continue to slide down due to uncertainty around the banking sector and current political situation given the election schedule this year. This has the potential to de-rail the sentiment & earnings growth for the next year," Hemang Jani, Head - Advisory, Sharekhan said.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan said the index has broken the swing low of 10,141 & has reached the trend line from previous swing lows where it has halted for the day. Breach of the swing low confirms wave extension on the downside with key targets placed at 10,000-9,800, he feels.
"We feel correction could be steep on broader front thus suggest maintaining extra caution in midcap and smallcap space," Jayant Manglik, President, Religare Broking said while reiterating immediate target of 10,000 for Nifty.
The correction seen in broader markets was more than frontliners as the Nifty Midcap index lost 1.5 percent and BSE Smallcap index shed 2 percent on weak breadth. About four shares declined for every share rising on the BSE.
On the global front, European markets were lower, as investors looked ahead to a trading week in which the Federal Reserve is likely to hike interest rates. Britain FTSE, Germany DAX and France CAC were down 0.6-1 percent at the time of writing this article. Dow Jones futures falling 1 percent also indicated the negative opening at Wall Street.
Asian markets closed mixed, with Japan's benchmark index underperforming regional peers, falling 0.9 percent and South Korea's Kospi down 0.8 percent. China's Shanghai Composite and ASX 200 gained 0.2-0.3 percent.
Back home, all the sectoral indices traded in line with the benchmark indices and ended lower. Metal, PSU Bank, Realty and IT indices hit hard, falling 2-3 percent.
IOC and BPCL shed 3.7 percent each after news report suggested that both companies may buy entire government's stake in gas distribution company GAIL.
Tata Steel, Bharti Airtel, HCL Technologies and Tech Mahindra were biggest losers among Nifty50 stocks, falling 4 percent each.
Infosys, Bajaj Finance, HDFC, ICICI Bank, HPCL, SBI, Eicher Motors and Yes Bank were down 1-3 percent whereas Maruti, L&T, HUL, Power Grid, NTPC, TCS and M&M gained up to 1.1 percent.
Lupin gained 0.6 percent after the company received final approval for its Desoximetasone Topical spra from the USFDA. It is a corticosteroid indicated for the treatment of plaque psoriasis in patients 18 years of age or older.
IDBI Bank, Central Bank of India, OBC, Syndicate Bank, SAIL, NMDC, JSW Steel, DLF, HDIL, Peninsula Land, REC, TV Today and Sona Koyo were down up to 10 percent. Graphite India, HEG, Sintex Industries and IOB gained up to 6 percent.