The BSE Sensex is down 0.4 percent, while the Nifty falls 0.45 percent, extending their retreat in 2014 for a fifth consecutive day.
Shares of blue chips fall after overseas investors sold 3.96 billion rupees worth of index futures on Monday, adding to Friday's selling of 6.08 billion rupees, exchange data shows.
Overseas investors also sold cash shares worth 3.19 billion rupees on Monday. They sold 1.39 billion rupees of shares in the previous session, regulatory and exchange data shows.
Axis Bank (AXBK.NS) falls 2.5 percent, while Tata Motors(TAMO.NS) is down 0.6 percent.
Technology shares fall on caution ahead of Infosys Ltd (INFY.NS) Oct-Dec earnings on Friday.
Infosys falls 0.7 percent, Tata Consultancy Services (TCS.NS) is down 0.5 percent, while Wipro (WIPR.NS) drops 1.5 percent.