Having opened in the red, the markets extended losses throughout the day and ended the trading session near the day's low.
The BSE Sensex ended at 17,222, down 264 points and the Nifty at 5,234, down 89 points.
During the day, the BSE benchmark index had touched the day's high at 17,408 and the day's low at 17,200.
"I expect the Nifty to move slightly downwards in the next few days.
"However, there is good support for the Nifty at around its 200 day moving average which is currently around 5,150 levels.
"So while we may move downwards, I do not expect the 200 day moving average to be broken," said Hormuz Maloo, Technical Analyst with Geojit BNP Paribas Securities.
In Asia, Japan's Nikkei average fell 1.5% to post its fifth straight day of losses on Monday, with a weak US jobs report raising fresh concerns over recovery in the world's largest economy and as a stronger yen weighed on exporters.
The index ended at 9,546, down 1.47%. The Shanghai Composite index ended lower by 1%.
Most of the sectoral indices reeled under intense selling pressure except for BSE Healthcare, which ended marginally higher. BSE Metal, Capital Goods and Bankex indices led the losses, down 2-3% each.
Shares of metal companies were under the hammer in trades today with many of them having ended lower by 2-5% on the Bombay Stock Exchange, after data showed a much slower pace in US jobs creation and inflation in China rising faster than expected, dimming the global outlook for copper demand.
The BSE Metal index, the largest loser among the sectoral indices, plunged 3.4% or 390 points.
Hindalco Industries, Sterlite Industries, Sesa Goa and JSW Steel, down 4-5% each, were the notable losers from the Metals' space.
Crompton Greaves, Alstom Projects India and Punj Lloyd, down 4-5% each, were the prominent losers from among the Capital Goods stocks.
Shares of power equipment maker Bharat Heavy Electricals Ltd and engineering and construction conglomerate Larsen & Toubro also dropped amid expectations of weak February industrial output data due on Thursday.
BHEL ended at Rs 263, down 4% and L&T shed 4% at Rs 1,297.
L&T also accounted for a 31-point loss on the Sensex.
Among financials, SBI slipped 3% at Rs 2,101.
Meanwhile, the bank's Managing Director A Krishna Kumar said over the weekend that the bank is aiming for growth of 20% to 25% in credit and deposit in financial year that began April 2012.
Both SBI and ICICI Bank accounted for a 50-point loss on the BSE benchmark index.
Index heavyweight Reliance Industries also traded lower by 1% at Rs 743 after Kotak cut its price target for the stock, citing "conflicting" company signals on the use of cash, "confusing" news from exploration and production, and "continuing weakness" in chemicals and refining margins.
Hindustan Unilever traded higher by 1% at Rs 404 and was a major gainer on the Sensex.
The scrip gained after the company sold its property at Worli, Mumbai to the Ajay Piramal Group for Rs 453 crore (Rs 4.53 billion).
"HUL has signed an agreement with entities of Piramal Realty (Ajay Piramal Group) for assignment of leasehold rights of the land and building called 'Gulita' at Worli Sea Face, Mumbai, for a transaction value of Rs 452.5 crore (Rs 4.52 billion).
"The consideration includes both fixed and variable components," the fast moving consumer goods said in a filing to the stock exchanges.
Cipla, Bajaj Auto and DLF, up 1% each, were the other gainers from the pack.
Jewellery stocks were in the limelight in an otherwise weak market after the jewellers called off their three-week-old strike on assurances from Finance Minister Pranab Mukherjee that the government would consider scrapping a budget proposal to levy an excise duty on unbranded jewellery.
Shree Ganesh Jewellery House, Gitanjali Gems and Su-Raj Diamonds and Jewellery traded higher by 1-4%.
Most of these stocks had been under selling pressure ever since the government proposed a 1% levy on non-branded jewellery for the first time and doubled import duties on gold bars in last month's annual budget.
The overall market breadth was negative as 1,636 stocks declined against 1,183 advancing ones, on the BSE.