Sensex fell 466.26 points (0.56%) to 82,159.97 and Nifty dropped 124.70 points (0.49%) to 25,202.35.
IT stocks dragged markets after US President Trump raised H-1B visa fees to USD 1,00,000 per worker.
2,511 stocks declined, 1,775 advanced, 169 unchanged on BSE.
Analysts noted GST rate cuts, normal monsoon, tax incentives, and earnings optimism may support markets ahead.
Benchmark equity indices Sensex and Nifty ended sharply lower on Monday, dragged by IT stocks amid concerns over the US President Donald Trump's decision to raise H-1B visa fees to USD 1,00,000 per worker.
Also, selling in blue-chip Reliance Industries took the markets down.
Falling for the second day in a row, the 30-share BSE Sensex dropped 466.26 points or 0.56% to settle at 82,159.97. During the day, it tanked 628.94 points or 0.76% to 81,997.29.
The 50-share NSE Nifty declined 124.70 points or 0.49% to 25,202.35.
From the Sensex firms, Tech Mahindra, Tata Consultancy Service, Infosys, HCL Tech, Tata Motors, Trent, Reliance Industries and Larsen & Toubro were among the major laggards.
However, Eternal, Bajaj Finance, Adani Ports and UltraTech Cement were among the gainers.
President Trump on Friday signed a proclamation raising the fee on the visas used by companies to hire workers, including from India, to live and work in the US.
The H-1B visa fee of USD 1,00,000 would be applicable only to new applicants, a White House official clarified on Saturday.
"The domestic market traded on a lower note amid a sharp increase in H-1B visa costs, which weighed on the IT index, while mid and smallcap stocks saw profit-booking following recent gains. GST rationalisation, a normal monsoon, lower interest rates, and tax incentives are expected to support consumption, narrowing the gap between valuations and growth prospects.
"Foreign investors are gradually turning buyers, driven by expectations of earnings upgrades in H2FY25, with consumption-focused sectors likely to attract attention and support the market," Vinod Nair, Head of Research, Geojit Investments Limited, said.
The BSE midcap gauge declined 0.78% and smallcap index went lower by 0.71%.
Among sectoral indices, BSE Focused IT tanked 2.98%, IT (2.73%), teck (2.09%), capital goods (0.77%), industrials (0.75%) and auto (0.41%).
Utilities jumped 2.56%, power (1.66%), metal (0.39%), oil & gas (0.36%) and services (0.08%).
As many as 2,511 stocks declined while 1,775 advanced and 169 remained unchanged on the BSE.
"Early weakness, driven by selling in IT stocks amid concerns over the H-1B visa fee hike, was partly offset by a rebound from the day's low. Sentiment also found some support from the GST rate cuts that came into effect today, which helped limit losses during the first half.
"However, sustained pressure from heavyweight stocks dragged the index lower as the session progressed, with the Nifty finally settling at 25,202.35," Ajit Mishra - SVP, Research, Religare Broking Ltd, said.
In Asian markets, South Korea's Kospi, Japan's Nikkei 225 index and Shanghai's SSE Composite index settled in positive territory while Hong Kong's Hang Seng ended lower.
Markets in Europe were trading lower.
US markets ended higher on Friday.
Global oil benchmark Brent crude dipped 0.10% to USD 66.61 a barrel.
Foreign institutional investors (FIIs) bought equities worth ₹390.74 crore on Friday, according to exchange data.
On Friday, the Sensex tanked 387.73 points or 0.47% to settle at 82,626.23. The Nifty declined 96.55 points or 0.38% to 25,327.05.
