Indian shares started the week on a bearish note on Monday tracking overseas markets, with edgy investors booking profits across the board.
Government bonds eased slightly, but traders said underlying sentiment remained bullish with a big cash pile, that has been spurring buying in recent weeks, set to grow on inflows from two bond redemption's later in the week.
The top 30-issue Mumbai Stock Exchange index fell 1.43 percent to 5,365.40 points, a new three-month low with auto, steel and technology stocks leading the slide. The decline was broad-based with losing issues outnumbering gainers four to one.
"The weakness in other global markets and the tight liquidity after a slew of public issues in the past few weeks are driving shares lower," said Jayesh Shroff, fund manager at BOB Mutual Fund. "The outlook is choppy until the expiry of derivative positions on Thursday."
Investors traditionally unwind futures positions just ahead of the expiry of the monthly contracts. Stock futures are popular and account for about 60 percent of the trade in derivatives.
India's biggest car maker, Maruti Udyog, which is majority-owned by Japan's Suzuki Motor Corp fell nearly six percent to 442.55 rupees despite announcing plans to hike prices across its models from April.
Leading steel maker Steel Authority of India fell nearly seven percent to 32.75 rupees on newspaper reports that a shortage in coke supply would hurt its output.
Technology issues also slid, tracking losses on the Nasdaq. Bellwether Infosys Technologies slipped more than two percent to 5,081.60 rupees and Wipro, the No 3 software services exporter, fell more than three percent to 1,381.15 rupees.