Infosys dropped 3.92 per cent on reports that it may face heat as US' Department of Homeland Security is reviewing its employer eligibility after finding errors in identity verification forms of some of the company's staff.
India's leading software and IT services exporters get about 60 per cent revenues from the US market.
Market men also attributed the fall to a report that a hedge fund has exited short positions in India's single stock futures.
The decline was, however, cushioned by RIL which gained 0.64 per cent despite a sharp dip in forth quarter earnings, as they were in line with investor expectations.
The BSE 30-scrip index, Sensex, opened lower at 17,347.76 and moved between 17,444.18 and 17,056.77. It closed at 17,096.68 -- down 277.16 points or 1.60 per cent from Friday, when it fell 130 points.
The NSE 50-share index Nifty also dropped 90.25 points or 1.71 per cent to finish at 5,200.60.
Other Asian markets ended lower amid indications that China's manufacturing has contracted further in April. Key indices in the region were down by up to 1.84 per cent. European markets also opened in the red.
“Profit booking emerged during the afternoon session as market pared initial gains and slipped into the red. Negative openings in European markets further hurt the sentiment,” said Shanu Goel, Research Analyst at Bonanza Portfolio.
“Infosys witnessed selling pressure on reports of US security on it visa issue. TCS was active ahead of its results announcement and closed down with more than 2 per cent losses,” she added.
Of the 30 Sensex share, 25 closed with losses.
Major losers were Hindalco (4.88 pc), Jindal Steel (4.32 pc), BHEL (4.19 pc), Sterlite (3.67 pc), Bharti Airtel (3.55 pc), SBI (3.02 pc), L&T (2.88 pc), TCS (2.77 pc), Tata Power (2.67 pc), Bajaj Auto (2.61 pc), Gail India (2.27 pc), Tata Motors (2.19 pc), Coal India (2.11 pc), ICICI Bank (1.98 pc), Hero Motoco (1.92 pc), Cipla (1.88 pc), M&M (1.60 pc), Tata Steel (1.58 pc), HUL (1.54 pc), HDFC Bank (1.13 pc) and Maruti (1.12 pc).
Among the sectoral indices the BSE-Realty fell 3.17 pc, followed by Teck - 3.02 pc, IT - 2.94 pc, Metal - 2.86 pc, Capital Goods - 2.84 pc, Power - 2.63 pc and Bankex - 2.08 pc.
The total market breadth was negative with 1,800 stocks finishing in the red and 990 stocks closing with gains. The total turnover dropped to Rs 2,033.13 crore, from Rs 2,208.98 crore on Friday.