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The 30-share Sensex ended down 66 points at 28,438 and the Nifty ended down 15 points at 8,633.
Markets ended lower, amid a choppy trading session as institutional investors booked profits on caution ahead of the two-day US Federal Reserve policy meet which begins tomorrow while further contraction in February WPI data weighed on investor sentiment.
The 30-share Sensex ended down 66 points at 28,438 and the Nifty ended down 15 points at 8,633.
"Markets have remained edgy ahead of the US Fed policy meet which could hint about the direction of interest rates while weak February WPI data raised concerns over the extent of the economic recovery," said Tirthankar Patnaik, Chief Strategist and Head of Research at Mizuho Bank.
The Wholesale Price Index-based for February contracted further to -2.06% compared with -0.39% in the previous month, because of drop in global crude oil prices.
Growth of manufactured goods remained flat raising concerns over the strength of the economy.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 66.98 crore on Friday, as per provisional data released by the stock exchanges.
Domestic institutional investors (DIIs) sold shares worth a net Rs 71.55 crore on Friday, as per provisional data.
The Indian rupee gained 15 paise to 62.80 against the US dollar on Monday at the Interbank Foreign Exchange market on fresh selling of the US dollar by exporters.
The BSE IT index was the top sectoral gainer up 1.5% followed by Realty and Consumer Durables. Metal, Capital Goods, FMCG, Power, Oil and Gas indices were among the top losers.
Stocks with large institutional holdings such as HDFC, ITC and Hindustan Unilever ended down 1-1.6% each.
Metal shares were among the top losers as growth in China's fiscal revenue cooled to its slowest in at least a year between January and February as China's foundering economy dampened tax collection and other key sources of government income.
Sesa Sterlite, and Hindalco ended down 3.6-5.2% each. State Bank of India ended up 0.3%.
The bank's Executive Committee of Central Board on Friday approved issue of 10,04,77,012 equity shares at Rs 295.49 per share, ranking pari-passu with the existing equity shares of the bank in all respects, on preferential basis to the Government of India, for a consideration of Rs. 2970 crore.
Oil and gas shares remained under pressure tracking fall in global crude oil prices. Reliance Industries and ONGC ended down 0.6-1% each. IT stocks ended firm with Wipro and Infosys gaining 1.4-2% each.
Infosys ended up 2% on reports that the company plans to focus on the products business and is in the process of including core banking software Financle in its products and platform business EdgeVerve. Wipro Infotech is planning to launch business process outsourcing (BPO) services in India with a focus on transaction processing.
Auto stock were trading with marginal gains. Bajaj Auto ended up 0.2% on talk that it will re-introduce its popular scooter brand Bajaj Chetak in the market. Tata Motors, Hero MotoCorp ended up 0.1-0.2% each.
Among other shares, Diamond Power rallied 19% to Rs 45 after the company said it has received orders worth of Rs 332 crore from Assam and Nagaland governments. In the broader market, the BSE Mid-cap and Small-cap indices ended down 0.3-0.9% each. Market breadth ended weak with 1,855 losers and 1,029 gainers on the BSE.
