MUMBAI: The Sensex fell more than 2 percent early on Monday, as investors took profits after the market rose almost 21 percent over the past three weeks.
By 9:56 a.m., the 30-share index was down 2.3 percent at 9,817.34 points, with 29 stocks declining.
The 50-share NSE index was down 1.9 percent at 3,049.05.
"It looks like it's going to be a bad day today. There is nothing to look forward to, but shares may recover slightly later in the day if European markets open higher," Arun Kejriwal, a strategist at research firm KRIS, said.
Asian markets were lower after their recent rallies were seen as overdone. By 0344 GMT, Japan's Nikkei was down 1.5 percent, while MSCI's measure of other Asian markets fell 2.4 percent.
Nifty futures traded in Singapore were trading down 2 percent, pointing to a lower opening in India.
On Friday, the 30-share index rose 0.5 percent to 10,048.49 points, a day after it climbed past five-digits for the first time since Jan. 7 -- when Satyam Computer unveiled the country's biggest corporate fraud.
The rise was sparked by hopes the worst may be over for the global economy, but analysts say the market is now overbought.
A Reuters technical analysis showed there is little upside for the market.
Worries about when the slowing Indian economy will begin a revival and uncertainty on the political outlook ahead of general elections in April and May will weigh on investor confidence,
traders said.
STOCKS TO WATCH
* Reliance Industries, after it signed deals with 12 fertiliser firms to sell about 15 million standard cubic metres a day of gas from its giant field from the middle of next month.
* Sun Pharmaceutical Industries Ltd, after it said it received approval from the U.S. Food and Drug Administration to sell topiramate tablets, used for the treatment of seizures.
* Graphite India, after it said it plans to buy back foreign currency convertible bonds worth $3.79 million.
* TVS Motor Co, after it said its board approved investing 890 million rupees in a new firm, which in turn would invest in the financing business of TVS' two and three wheelers.
