Markets extended losses and were trading near their day's lows on profit taking in metal shares and IT shares. The S&P BSE Sensex slipped over 300 points to 20,225 levels while the CNX Nifty lost 1.3% to 6,007 levels by 3:15pm.
The rupee turned marginally lower as state-run banks were seen buying dollars to likely to meet defence needs, foreign banks took cover ahead of RBI's reference rate setting.
The rupee is trading at 62.75 compared with its previous close of 62.68, after rising to 62.56 in early trades.
Stocks in Asia continued to trade lower. Japan's benchmark share index the Nikkei dropped to a new 2-1/2 month low on Monday, extending losses for third straight day as investors remained cautious on weak economic data from China and ahead of the US jobs data.
The Nikkei ended down 2% to 14,619, its lowest closing level since November 13. Singapore's Straits Times was down 1% at 2,996. Stock markets in China, Hong Kong and Taiwan are closed on account of Lunar Year holidays.
BSE Metal index was the top loser among the sectoral indices down 2.1% followed by Realty, Bankex, IT, AUto, Oil and gas indices. However, Healthcare index was up 1% while Consumer Durables index was up 0.2%.
Metal shares were down after official data released by China on Saturday showed that the country's factory growth in January eased to six-month low at 50.5 from 51 in December. Tata Steel, Hindalco, Sesa Sterlite, JSW Steel were down 1-6% each.
IT majors TCS and Infosys were down 1.3% each on account of profit taking at higher levels.
Shares of mobile phone service providers such as Bharti Airtel, Reliance Comm and Idea were down 1.5-3% each on worries that aggressive bidding for the 900-MHz bandwidth with the entry of Reliance Jio would lead to higher costs for retaining the spectrum.
Share of four-wheeler majors such as Tata Motors, Maruti Suzuki and Mahindra & Mahindra were down 0.5-3% each after they reported disappointing January sales on Saturday.
Other shares which contributed to the Sensex decline include ICICI Bank and FMCG major ITC.
In the oil and gas sector, Reliance Ind was down 0.5% and ONGC fell 1.7%.
Lupin was up 0.3%. The pharma major today reported Q3 net profit of Rs 476 crore as compared to Rs 335 crore in the same period last year, a gain of 42%. Revenue came in at Rs 3,022 crore as compared to Rs 2,501 crore in the year ago period. Sun Pharma and Dr Reddys Labs were up 1-2% each.
In the broader market, the BSE Mid-cap index was trading flat while BSE Small-cap index was trading 0.3% higher.
Market breadth was marginally higher with 1,077 gainers and 909 losers on the BSE.
