The Sensex fell to a three-week low on Monday after disappointing quarterly earnings hit Bank of Baroda and IDFC, while investors continued to book profits in recent outperformers such as ONGC.
Broader losses were capped as Tata Motors and UltraTech Cement rebounded from Friday's steep falls when the two stocks were affected by a technology glitch at a domestic brokerage that resulted in "unintended transactions."
Sentiment has been dented ever since the Reserve Bank of India disappointed investors on January 29 with a more cautious than expected stance on future rate cuts. The Sensex has fallen 1.44 percent since then as of Monday's close.
Analysts expect trading to remain rangebound in the lead-up to the presentation of the 2013/14 federal budget on February 28. Finance Minister P. Chidambaram has reiterated his commitment to controlling spending, especially at a time when India faces fiscal and current account deficits.
"There is a big gap between the previous trigger that is RBI rate cut and the next which is the budget, so there is some profit-booking in the interim," said G Chokkalingam, Executive Director & Chief Investment Officer, Centrum Wealth Management.
0.15 percent, or 30 points, to end at 19,751.19, marking its lowest close since January 11.
The Nifty fell 0.19 percent, or 11.65 points, to end at 5,987.25, closing below the psychologically important 6,000 level.
Bank of Baroda shares slumped 7.36 percent after the lender said October-December net profit fell 21.6 percent from a year earlier to 10.12 billion rupees, while non-performing assets rose.
Shares in IDFC Ltd fell 5.42 percent after the lender and consultant for infrastructure projects registered weak loan growth in the December quarter and reported an in-line profit growth.
Jubilant Foodworks Ltd dropped 5.3 percent after reporting a smaller-than-expected 28 percent rise in quarterly net profit, with margins also falling short of market expectations.
Investors also booked profits in recent out-performers. Oil and Natural Gas Corp shares fell 1.94 percent, down for a second consecutive session, after surging 26.8 percent in January.
State Bank of India fell 2.5 percent, posting its fifth losing session out of the past six.
However, Tata Motors Ltd gained 3.67 percent and UltraTech Cement Ltd ended up 3.24 percent after each briefly plunged as much as 10 percent on Friday.
Religare Capital Markets said on Saturday a technology glitch at the brokerage had caused "unintended transactions" in the shares of Tata and UltraTech.
Power Finance Corp Ltd rose 3.55 percent and Rural Electrification Corp Ltd shares gained 5 percent on speculation the government is preparing to offer new incentives to revive stalled power projects.
ICICI Bank Ltd added 1 percent after falling 3.4 percent in the previous two sessions.