The Nifty, which had hit a lifetime high of 9,160 on Friday after scaling an intra-day record of 9,218.4, could not hold up against profit-booking and closed down 33 points, or 0.4 per cent, at 9,126.8.
The Sensex moved in a narrow band and closed at 29,518.7, down 130 points or 0.4 per cent. It shuttled between 29,482.4 and 29,699.5.
The Sensex had rallied 703 points, or 2.4 per cent, to 29,649 last week after the BJP's humongous win in Uttar Pradesh. BJP is Bharatiya Janata Party. The Nifty gained 225.5 points, or 2.5 per cent, to finish at a new closing peak of 9,160.
"Market is under a breather, after a rally led by state election results and supportive FII (foreign institutional investor) inflows. IT (information technology) stocks were the laggards on Monday due to the concern of a strong rupee, which could impact their export revenue," said Vinod Nair, head of research, Geojit Financial Services.
Approval of the Bills by Parliament and a separate one by all state Assemblies will complete the legislative process for rollout of one-nation-one-tax regime by merging central taxes like excise duty and service tax with state levies like VAT (value-added tax).
The GST council has already approved four-tier tax slabs of 5, 12, 18 and 28 per cent, plus an additional cess on demerit goods like luxury cars, aerated drinks, and tobacco products. (In economics, a demerit good is a good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to the perceived negative effects on the consumers themselves. It is over-consumed if left to market forces.) The work for fitting various goods and services in different slabs is set to begin next month.
Foreign portfolio investors (FPIs) carried on with their buying as they picked up shares worth a net Rs 1,533 crore last Friday while domestic institutional investors (DIIs) net sold shares worth Rs 711.5 crore, going by provisional data.
Most Asian stocks ended higher while European shares were trading in the negative zone.
Among stocks, Idea Cellular tumbled 9.6 per cent to Rs 97.6 after the company announced its union with Vodafone India to create the country's largest mobile player.
Stocks of IT companies felt the heat as the rupee added to its gains, which dragged down the Sensex. The rupee ended on a higher note at 65.36 against the dollar.
The market is in an "over-bought" position and cautious participants preferred to lock in some gains.
Among the 30-share Sensex components, Axis Bank emerged as the top loser by logging a fall of 2.4 per cent, followed by ICICI Bank. Other laggards were Infosys, Tata Consultancy Services, Wipro, Reliance Industries Limited, Tata Steel, Larsen and Toubro, Hindustan Unilever Limited, PowerGrid, Maruti Suzuki, and Mahindra and Mahindra.
In contrast, NTPC, Coal India, Bharti Airtel, HDFC Bank, Lupin, HDFC Ltd, Oil and Natural Gas Corporation, GAIL, and Asian Paints ended with gains, which cushioned the losses.
The BSE IT index lost steam, losing 1.4 per cent, followed by technology, oil and gas, and bank indices.
The broader markets stayed ahead of the Sensex. The small-cap index rose 0.3 per cent and mid-cap 0.17 per cent.
Japanese exchanges were shut for a public holiday.
The 30-share Sensex pack shows 16 stocks losing and 14 gaining.
The market breadth remained negative as 1,444 shares ended lower and 1,353 higher while 226 kept steady.
The total turnover on BSE amounted to Rs 56,820.6 crore, higher than Rs 4,595 crore in the previous trading session.