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The Sensex and Nifty snapped three sessions of gains on Monday as investors sought refuge in safe havens as tensions in the Korean peninsula escalated following North Korea's sixth and most powerful nuclear test on Sunday.
The BSE index dropped 189.98 points or 0.6 per cent to 31,702.25, while the broader NSE index closed down by 61.55 points or 0.62 per cent at 9,912.85.
The NSE's volatility index, the domestic equivalent of the VIX fear gauge, rose as much as 19.53 per cent in its biggest intraday percent gain since May 18.
North Korea had on Sunday conducted its sixth and most powerful nuclear test, which it said was of an advanced hydrogen bomb for a long-range missile, marking a dramatic escalation of the regime's stand-off with the United States and its allies.
Barring metal, all other BSE sectoral indices ended in the negative zone. Among them, realty index fell 1.39 per cent, followed by IT 1.02 per cent, TECk 0.94 per cent and infrastructure 0.89 per cent, while only metal index was up 0.26 per cent.
Top five Sensex losers were Adani Ports (-2.6%), Infosys (-2.04%), Hero MotoCorp (-1.82%), Tata Motors (-1.61%) and Bharti Airtel (-1.56%), while the major gainers were Coal India (+3.38%), Sun Pharma (+2.79%), ONGC (+1.06%), Lupin (+0.24%) and Wipro (+0.19%).
Japan's Nikkei closed about 1 per cent lower, while MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.8 percent.
“The markets are struggling to go up because of North Korea tensions,” said Deven Choksey, promoter, KR Choksey.
Technical charts showed the NSE index broke out of a triangle formation last week, suggesting consolidation was complete and a rally might resume.
“Banking stocks such as HDFC Bank are a bit highly valued and are seeing some corrections,” Choksey said.
HDFC Bank Ltd and Housing Development Finance Corp Ltd were down for a second straight session, trading 0.9 per cent and 0.7 per cent lower, respectively.
The Nifty Auto index fell 0.8 per cent after gaining nearly 2 per cent on Friday when most automakers reported August sales numbers. Hero MotoCorp Ltd, which reported a 10 per cent rise in sales, was trading 1.6 per cent lower.
Meanwhile, Coal India Ltd surged as much as 2.9 per cent after the miner had said on Friday that the company along with its units produced 37.63 million tonnes of coal in August, beating its target of 36.96 million tonnes.
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