The S&P BSE Sensex extended losses for the sixth consecutive session on Monday, falling 97 points, tracking weak domestic and overseas cues.
The Sensex closed at 26,559 points, down 0.37%, while the 50-share Nifty fell 15 points, or 0.19%, to end at 8,050.
"Indices did open with a negative bias on the back of weak cues from equity markets across the globe and lost further ground throughout the day led by losses with capital goods, metals, healthcare and power stocks, even the small-cap stocks were under pressure," said Amar Ambani, Head of Research, IIFL.
The sell-off was mainly triggered by disappointing manufacturing data of both India and China. A survey showed that manufacturing activity fell to a 22-month low in October in India, due to sluggish growth in new orders.
Separately, data showed the factory activity in the world's second largest economy, China, declined for the eight consecutive month in October, renewing concerns over the country's slowdown.
Worries over China's slowdown led to a sharp sell-off in Asian markets, with China's Shanghai Composite index and Hong Kong's Hang Seng ending down 1.7% and 1.2%, respectively.
Among the BSE sectoral indices, Metal, Capital Goods and Healthcare were the top losers, while Reality, FMCG, and IT ended as the biggest gainers.
The Maruti Suzuki share gained a little over 1% to close at Rs 4,495 on the BSE, after the company reported 29% increase in sales for October. Similarly, Mahindra & Mahindra ended 2.2% higher, supported by a 20% increase in sales in October.
In contrast, the Bajaj Auto scrip plunged 4.8% after the company reported 8% decline in total sales for October.
Metal shares like Vedanta, Hindalco and Tata Steel ended sharply lower, weighed down by weak economic data in China.
ICICI Bank shares were up 0.8%, underpinned by the bank's earnings, which came in line with the street's estimates, for the second quarter in the current fiscal.
"In spite of assuming elevated credit cost in FY16/17 (to partially capture asset quality risks), we estimate ICICI Bank to deliver healthy earnings CAGR of 15% over FY15‐18. While RoA would be sustained at impressive 1.8%, the acceleration in balance sheet growth should produce leverage‐driven RoE improvement of 200bps over the aforesaid period," Ambani said.
On the commodities front, gold prices fell Rs 10 to end at Rs 26,810 per 10 gm, taking cues from weak metal prices in the overseas markets. Silver prices also ended Rs 270 lower at Rs 36,500 per kg.