The Sensex and Nifty closed lower on Monday, dented by financials such as ICICI Bank and State Bank of India as the IL&FS exposure still weighed, but losses were curbed by gains in Zee Entertainment Enterprises. While the Sensex fell 368 pts to 35,656, Nifty lost 119 points to 10,661. Of 30 Sensex stocks, 23 closed in the red.
TCS (1.71%), Coal India (1.51%), L&T (1.17%) and PowerGrid ( 0.97%) were the top Sensex gainers. Top Sensex losers were YES Bank (5.46%), Bajaj Finance (5.40%) and ICICI Bank (3.82%).
"The issue with Infrastructure Leasing and Financial Service Ltd (IL&FS) is not over, contrary to earlier beliefs and that is why we see housing finance companies in the red today," said AK Prabhakar, head of research, IDBI Capital - Mumbai.
On Friday, the Sensex fell 169.56 points down 0.47 per cent at 36,025.54.
In similar movement, the broader NSE Nifty ended 69.25 points, or 0.64 per cent, down at 10,780.55, after shuttling between 10,931.70 and 10,756.45.
Meanwhile, the mid cap and small cap indices lost 270 points and 278 points in trade today.
Market breadth was negative with 597 stocks closing higher compared to 1,962 ending in the red on BSE.
Banking stocks led the losses with the BSE index falling 565 points to 29,812. The BSE auto index also lost 261 pts to 18,362.
On a net basis, foreign portfolio investors (FPIs) bought shares worth Rs 689.28 crore on Friday, while domestic institutional investors (DIIs) were net sellers to the tune of Rs 147.35 crore, provisional data available with BSE showed.
ICICI Bank Ltd, the top laggard on the broader NSE index, fell nearly four percent ahead of its December-quarter results, while SBI traded 2.47 percent lower.
Dewan Housing Finance fell as much as 7.6 percent after reporting a drop in net profit last week, while housing finance company Indiabulls Housing Finance slipped 5.5 percent.
However, gains in Zee Entertainment capped further declines in NSE index, as the media company's stock jumped nearly 15 percent after it denied any involvement in demonetisation-linked transactions.
"There is a wait-and-watch sentiment because of the budget," said Vinod Nair, head of research, Geojit Financial Services, adding, "Earnings this quarter hasn't been great so far, and I don't think we will witness earnings growth of even 7 percent-8 percent this year."
Shares fell in Europe early Monday after Asian markets retreated from early gains on caution over China-US trade talks and over the ability of congressional negotiators to forge a government funding bill acceptable to President Donald Trump.
Germany's DAX lost 0.3 percent to 11,249.21 and the CAC 40 in France gave up 0.4 percent to 4,907.13. The FTSE 100 in Britain was flat at 6,811.94. Wall Street looked set for a slow start to the week, with the future contract for the Dow Jones industrial average down 0.4 percent to 24,590.00 and that for the S&P 500 also 0.4 percent lower at 2,652.00.
Edited by Aseem Thapliyal