Sensex posts second straight fall; Reliance slips
Sentiment was also hit as Asian shares skidded ahead of central bank meetings in the United States and Japan this week.
The Sensex fell for a second consecutive session on Monday as worries about increased capex hit heavyweight Reliance Industries, while Cairn India was hit after posting a quarterly loss.
The Nifty fell 0.56 percent to close at 7,855.05, while the Sensex ended down 0.62 percent at 25,678.93.
Caution also prevailed as monthly derivatives contracts are due to expire on Thursday, traditionally marking a volatile period in markets.
"There are multiple events including central bank meetings and F&O expiry scheduled for this week so market participants are a bit cautious ahead of those," said Rikesh Parikh, vice-president of equities at Motilal Oswal Securities.
The Nifty fell 0.75 percent to 7,839.35 by 0825 GMT, declining for a second session after hitting its highest since Dec. 2 last week.
The Sensex lost 0.79 percent to 25,634.93.
Among decliners, Reliance Industries fell 2 percent despite posting its highest quarterly profit since December 2007 after the energy firm said it would raise capex by more than expected this fiscal year due to downstream operations and spending on upcoming launch of 4G services.
Meanwhile, Cairn India shed 3.6 percent after the oil and gas explorer posted a quarterly loss, hit by an impairment charge.
Auto parts maker Motherson Sumi Systems dropped 4 percent after its customer Volkswagen posted a 4.1-billion-euros operating loss because of a diesel emissions test-rigging scandal.
On the other hand, Bharti Airtel rose 2 percent after the telecoms company said it would consider a share buyback at its board meeting on Wednesday.