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The BSE Sensex and Nifty edged lower after earlier hitting their lowest levels in 1-1/2 months as software services providers fell after Tata Consultancy Services' tepid comments on its outlook, while other blue-chips were hit by global risk aversion.
Oil prices touched fresh 5-1/2 year lows on Monday, spurring an emerging market sell-off as demand for the safe-haven yen picked up while European stocks stabilised after their worst week since 2011.
Foreign investors sold shares worth Rs 865 crore on Friday, bringing their total outflow to nearly $280 million over the last four consecutive sessions of sales, regulatory data showed.
The 50-share Nifty has started looking oversold after falling for six out of the past seven sessions and closing below its 50-day moving average on Monday for the first time in nearly two months.
"We believe the downside is limited from the current levels in index and expect consolidation or technical rebound in the coming session prior to any further fall," said Jayant Manglik, president at Religare Securities Ltd.
The Sensex ended 0.11 per cent lower at 27,319.6.
The Nifty closed down 0.05 per cent at 8,219.6, closing below its 50-day moving average for the first time since October 21.
Both indexes earlier declined to their lowest intraday level since October 30.
TCS fell 3.8 per cent, Tech Mahindra ended down 3.6 per cent, Wipro Ltd lost 0.3 per cent, Infosys ended 0.7 per cent lower and HCL Technologies Ltd closed 1.8 per cent down.
Metals and mining stocks fell tracking lower Chinese rebar futures and spot iron ore prices.
Tata Steel fell 0.4 per cent, Jindal Steel and Power lost two per cent, JSW Steel ended down 1.4 per cent while Sesa Sterlite fell 2.8 per cent.
In other blue-chips, Bharat Petroleum Corp fell 4.7 per cent and Axis Bank lost 1.4 per cent.
Among gainers, Oil and Natural Gas Corp rose 1.8 per cent and Coal India gained 3.5 per cent after Economic Times reported that disinvestments can be deferred till January.
Housing Development Finance Corp surged 5.1 per cent, marking its biggest daily gain since September 2013 on media reports Standard Life would increase stake in the lender's insurance unit.
