In lackluster trading, the Bombay Stock Exchange benchmark Sensex on Monday fell by over 70 points with investors adopting a cautious approach ahead of the RBI monetary policy on Tuesday.
Market leader Reliance Industries fell over 1 per cent to extend losses for the second day.
After moving in a narrow range, the 30-share index dropped 70.31 points to close at 16,740.50.
The wide-based National Stock Exchange index Nifty also lost 26.15 points to end the day at 4,970.90.
Trading volume declined as investors refrained from enlarging their positions ahead of the Reserve Bank's quarterly monetary policy tomorrow. Fears that the apex bank may signal interest rate hike had a negative impact on the banking and other interest rate-linked sectors like realty.
Blue-chip Reliance Industries fell 1.56 per cent to close at Rs 2,015.45.
On Friday, RIL nose-dived by 4 per cent after its partner Hardy Oil said it would stop exploring a well for gas in the D9 block off India's east coast.
In the 30-BSE index-linked stocks, 16 closed with losses while 14 ended with gains.