Indian shares fell sharply for the second straight session on Monday, recording their biggest drop in nearly 14 weeks, as investors consolidated positions ahead of the expiration of derivatives contracts and the year-end.
Investors were also discouraged by news that the government has no plans to sell its stake in Steel Authority of India Ltd Shares in India's largest steel maker fell more than 3 percent to 52.50 rupees.
The 30-share BSE index fell 1.85 percent to 9,085.89 points as losers beat gainers more than three to one in modest trade of 153 million shares. The 50-issue NSE index slipped 1.97 percent to 2,749.60 points.
But the BSE index is still up nearly 38 percent this year and foreign fund inflows have remained robust, totalling a record $10.5 billion so far this year, $2 billion more than in 2004.
"We saw some selling pressure ahead of the expiration of the monthly derivatives contracts (on Thursday), so investors may wait to see how that goes through before taking fresh positions," said C.K. Narayan, a technical analyst at ICICI Securities.
"The index is likely to remain volatile for the next couple of sessions and may fall another 150-200 points before we see an uptick," he said.
Pakistan's Karachi 100 index fell 1.25 percent to 9,372.57 points. The Sri Lanka stock market was closed for a public holiday.