Consequently, both the key equity indices closed the day's trade in the red, as heavy selling pressure was witnessed in information technology (IT), technology, media and entertainment (TECK) and automobile stocks.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged down 37.75 points or 0.44 per cent to 8,629.15 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,088.07 points, closed at 27,985.54 points -- down 91.46 points or 0.33 per cent from the previous close at 28,077 points.
The Sensex touched a high of 28,143.28 points and a low of 27,918.05 points during the intra-day trade.
The BSE market breadth was marginally tilted in favour of the bears -- with 1,452 declines and 1,264 advances.
On Friday, the benchmark indices had closed flat -- marginally in the red -- due to profit booking and negative global cues.
The barometer index had receded by 46.44 points or 0.17 per cent, while the NSE Nifty slipped by 6.35 points or 0.07 per cent.
Initially on Monday, the key equity indices opened on a flat note with a slightly negative bias following cues from negative Asian markets.
The markets also traded with apprehension as caution prevailed ahead of a speech by Federal Reserve Chair Janet Yellen later in the week.
Investors are vigilant of a possible interest rate hike in the US as this can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.
Further, investors were seen cautious after the government's decision on Saturday to appoint economist and banker Urjit R. Patel as the next Governor of the Reserve Bank of India (RBI).
Moreover, a weak rupee and lower crude oil prices led the key indices to cap gains.
The rupee depreciated by 13 paise to 67.19 against a US dollar from its previous close of 67.06 on Aug 19.
"The equity markets were slightly negative following global cues, mainly the Asian markets. Fed Reserve Chair Janet Yellen's upcoming speech on Friday is another cue," Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.
"The markets were also partially affected by the announcement of the new RBI Governer. However, it is too early to say how far the appointment is going to affect the markets."
In terms of investments, provisional data with exchanges showed that the foreign institutional investors (FIIs) sold stocks worth Rs 300.50 crore, while the domestic institutional investors (DIIs) bought scrip worth Rs 52.50 crore.
Sector-wise, the S&P BSE IT index plunged by 1.07 per cent, the technology, entertainment and media (TECK) index fell by 0.90 per cent, and the automobile index declined by 0.89 per cent.
On the other hand, the S&P BSE fast moving cosumer goods (FMCG) index rose by 0.62 per cent and the consumer durables index edged up by 0.23 per cent.
Major Sensex gainers during Monday's trade were: Hindustan Unilever (HUL), up 1.94 per cent at Rs 929.65; ITC, up 1.19 per cent at Rs 254.05; HDFC, up 0.59 per cent at Rs 1,377.75; Coal India, up 0.36 per cent at Rs 335.40; and Cipla, up 0.34 per cent at Rs 557.45.
Major Sensex losers were: Lupin, down 2.03 per cent at Rs 1,545.20; Tata Consultancy Services (TCS), down 2.02 per cent at Rs 2,551.45; NTPC, down 1.92 per cent at Rs 163.55; Sun Pharmaceuticals, down 1.63 per cent at Rs 769.95; and Axis Bank, down 1.40 per cent at Rs 580.15.
