Marking their biggest single-day loss in 2 weeks, the benchmark Sensex ended 134.67 down while the 50-share Nifty ended 39 points down. Fear took over as key news came in that key reform bills, including GST and Land, may not be passed during the monsoon session of Parliament.
The fall was mainly due to late sell-off by participants, which wiped out whatever gains the benchmark had notched up earlier in the day.
The global cues remained mixed, though.
Investors got the jitters on concerns that the governments' reforms process will get delayed as key GST and Land Bills may spill over to the next session as the Lok Sabha and the Rajya Sabha stood adjourned for yet another day amid continued Opposition protest, brokers said.
The gauge opened on a higher note at 28,250.78 and stayed in the positive zone for most part to touch the day's high of 28,417.59 on the back of value-buying in several blue-chips amid optimism that easing global crude oil prices will cut country's import bill.
Meanwhile, Brent crude for delivery in September fell 36 cents to USD 48.25 per barrel.
However, fag-end selling by investors as well as funds, ate into the gains and took the benchmark back to the negative territory, which hit a low of 28,017.85 before settling at 28,101.72 points, a fall of 134.67 points, or 0.48 per cent, marking it as the biggest single session fall since July 27.
The benchmark Sensex swung almost 400 points during the day. The index had lost 61.74 points in Friday's session.
The 50-share Nifty, after reclaiming the 8,600-mark, touched the session's high of 8,621.55 intra-day, before settling lower by 39 points, or 0.46 per cent, at 8,525.60.
Of the 30-pack Sensex, 20 ended with losses and 10 higher.
A mixed close at other Asian markets and a lower opening in Europe influenced sentiment, brokers added. The Shanghai Composite ended the day higher.
The stocks that contributed to the fall include ONGC, M&M, NTPC, Tata Motors and Coal India.
Bucking the trend, BHEL, Hero MotoCorp, GAIL, TCS, Bajaj Auto, SBI, HDFC, Lupin and HDFC Bank ended higher, cushioning the fall.
Maruti Suzuki climbed 1.03 per cent on reports of plans to raise FII limit.
Sector-wise, the BSE infrastructure index suffered the most (down 1.08 per cent), followed by metal, oil and gas and consumer durables.
Broader markets too stayed on a weak wicket, with the BSE smallcap and midcap indices falling up to 0.41 per cent.
Meanwhile, foreign portfolio investors (FPIs) net sold shares worth Rs 93.74 crore last Friday, as per provisional exchange data. Domestic institutional investors (DIIs) net bought shares worth Rs 34.08 crore.