Sensex fell 119 points to 81,785.74, Nifty dropped 44.80 points to 25,069.20, snapping an eight-day winning streak.
Profit-taking in IT and auto shares ahead of the US Federal Reserve policy meeting drove the decline.
Sensex laggards included Mahindra & Mahindra, Infosys, Asian Paints, Titan, Sun Pharma, TCS, Tech Mahindra, and Power Grid.
Gainers included Bajaj Finance, UltraTech Cement, Reliance Industries, and Eternal.
Broader markets showed smallcap +0.66% and midcap +0.40%.
Benchmark Sensex dropped nearly 119 points while Nifty snapped its eight-day winning run in a volatile trade on Monday due to profit-taking in IT and auto shares ahead of the US Fed policy meeting.
Ending its five-day rally, the 30-share BSE Sensex declined by 118.96 points or 0.15% to settle at 81,785.74. During the day, it hit a high of 81,998.51 and a low of 81,744.70.
The 50-share NSE Nifty settled lower by 44.80 points or 0.18% to 25,069.20, halting its eight-day uptrend.
Investors stayed on the sidelines as markets await the outcome of this week's US Federal Reserve policy meeting, analysts said.
Among Sensex firms, Mahindra & Mahindra, Asian Paints, Infosys, Titan, Sun Pharma, Tata Consultancy Services, Tech Mahindra and Power Grid were the major laggards.
However, Bajaj Finance, Eternal, UltraTech Cement and Reliance Industries were among the gainers.
"Benchmark indices traded largely flat as investors remained cautious ahead of the Fed policy meeting, with the IT index witnessing profit-booking after last week’s rally. While a 25-bps rate cut is largely factored in, markets await guidance on the future rate path to gauge the trajectory for bond yields.
"Strong domestic consumption continues to underpin sentiment and limit downside, while renewed optimism around trade deals and an expected earnings recovery in H2FY26 are further supporting investor confidence," Vinod Nair, Head of Research, Geojit Investments Limited, said.
Broader markets were positive with the Smallcap gauge climbing 0.66% and the Midcap index gaining 0.40%.
"Indian markets ended Monday’s session on a muted note, with the benchmark indices slipping into the red amid volatile, rangebound trade," Gaurav Garg, Research Analyst Lemonn Markets Desk, said.
Among sectoral indices, BSE Focused IT dropped the most by 0.63%, followed by IT (0.60%), consumer durables (0.50%), teck (0.45%) and auto (0.32%).
Realty jumped 2.47%, while capital goods (0.61%), industrials (0.61%), telecommunication (0.53%) and power (0.51%) also advanced.
"Benchmark index snapped their eight-session winning streak and ended marginally in the red on Monday, as market participants adopted a cautious stance ahead of the upcoming US Fed policy announcement.
“Despite a 25-bps rate cut being largely priced in, all eyes remain on the Fed’s forward guidance for cues on the future interest rate trajectory and its implications for bond yields," according to Bajaj Broking Research.
In Asian markets, South Korea's Kospi and Hong Kong's Hang Seng settled in positive territory while Shanghai's SSE Composite index ended lower. Japan's stock market was closed for a holiday.
Markets in Europe were trading mostly higher. US markets ended on a mixed note on Friday.
Last week, the BSE benchmark jumped 1,193.94 points or 1.47%, and the Nifty climbed 373 points or 1.50%. In eight trading days, the Nifty jumped 534.4 points or 2.17%.
Global oil benchmark Brent crude climbed 0.48% to USD 67.31 a barrel.
Foreign institutional investors (FIIs) bought equities worth ₹129.58 crore on Friday, according to exchange data.
