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Indian pedestrians walk on Dalal Street - Trader's Street - next to the Bombay Stock Exchange (BSE) in Mumbai on March 7, 2014.INDRANIL MUKHERJEE/AFP/Getty Images

Equity markets saw a fifth straight session of decline on Monday, with the benchmark indexes ending nearly 1.5 percent each after steeper intraday losses. The sustained selling was triggered by further weakening in financial stocks that were battered by the blowback from the ongoing IL&FS crisis, exacerbating concerns over higher crude prices and a weak rupee.

While the BSE Sensex closed at 36,305, down 537 points, the broader Nifty ended the day at 10,975, down 168 points. Earlier, the Sensex had sunk to an intra-day low of 36,239 points while the 50-share index was down to 10,946.

The losses on the Dalal Street were led by non-banking financial companies (NBFCs), which had spectacularly collapsed on Friday. Shares in Bajaj Finance, Indiabulls Housing Finance, Reliance Home Finance, Cholamandalam Investment and Finance Company and Ujjivan Financial Services suffered losses in the range of 5 to 15 percent.

Since September 14, the financial services index slipped 7 percent while the broader index fell 3.7 percent, Business standard noted.

Monday's losses came despite the RBI and the regulator Securities and Exchange Board of India (Sebi) assuring markets that all appropriate steps would be taken to ensure calm.

Following it up, finance Minister Aurn Jaitley said on Monday that adequate liquidity at non-banking financial companies would be ensured.

Analysts on Monday said they remained cautious and that more downside was likely. "Market correction was overdue given the stretched valuations. With oil on the boil and rupee levels, it was just a matter of time for the markets to take cognizance," Tirthankar Patnaik, India Strategist at Mizuho Bank, said.

"Developments related to IL&FS, however, were foreseen. The current market movement is more of a contagion and has led to a risk-off phase now. The Nifty50 can dip another 500-points from here on in a worst-case scenario," he added.

Friday's rout was triggered by further bad news stemming from under-pressure Infrastructure Leasing & Financial Services Limited (IL&FS). The infrastructure company said on Friday it was selling majority stake in its financial services unit and offloading assets worth Rs 4,500 crore. The company has been struggling to pay off debt and avoid bankruptcy. The company, which undertakes premier infrastructure projects in the country, also sent an SOS to the central government to urgently clear dues worth as much as Rs 16,000 crore.

Macquarie Research explained in a note on Monday that IL&FS defaulted on its debt obligations and that rating agency ICRA downgraded it from AA+ to BB on 8th September and then to D on 17th September. IL&FS is one of India's largest infrastructure financiers with consolidated debt of Rs910bn.