Sensex edged lower on Monday and looked set to snap a seven-session gaining streak with oil refiners falling sharply while broader sentiment was subdued after Standard & Poor's retained the country's sovereign rating.
The rating agency maintained its "BBB-minus" sovereign rating and "stable" outlook for India on Friday, citing low income levels, high debt and weaker government finances.
Bond yields too rose 3 basis points to 7.03 percent on the back of the S&P rating review, though investors are now awaiting key macrodata due later this week for cues.
The S&P rating was slightly disappointing as some upgrade had been anticipated following Moody's recent positive rating action, said Anita Gandhi, whole-time director at Arihant Capital Markets.
"In terms of valuations, markets are slightly on the higher side. The driving factor going forward will be the GDP and fiscal deficit data, expected on Thursday," she added.
The broader NSE Nifty was down 0.31 percent at 10,357.50 points as of 0625 GMT, while the benchmark BSE Sensex was 0.25 percent lower at 33,594.73.
Oil refiners fell as crude prices touched a two-year high earlier in the day, with Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd down more than 1 percent each.
The Nifty PSU bank index fell as much as 1.3 percent in its third straight session of losses, with State Bank of India shedding more than 1 percent.
Infosys Ltd lost more than 1 percent after gaining in the last four sessions as investors booked profits.
Axis Bank Ltd was the top gainer on the NSE index, rising as much as 2.3 percent in its third straight session of gains.
"Axis Bank did not participate in the earlier rally of private banking stocks. The stock is still available at a relatively cheaper valuation," Gandhi said.
Sun Pharmaceutical Industries Ltd slid as much as 2.1 percent after its unit on Friday recalled two batches of Riomet, an oral diabetes drug, due to microbial contamination.
Adani Group stocks fell as hopes of Australian government loan for coal mine faded with the left-leaning Labor Party on track for re-election in a state poll.