The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 15,287.14 points, ended trade at 15,009.77 points, down 150.47 points or 0.99 percent from its last closing figure.
Similarly, the Nifty of the National Stock Exchange (NSE) shut shop in the red at 4,437.65 points, down 0.98 percent.
Broader market indices, too, came under selling pressure with the BSE midcap index closing 1.71 percent down, while the BSE smallcap index ended 1.95 percent lower.
According to the India Meteorological Department, the cumulative seasonal rainfall for the country as a whole during June 1-Aug 5 has been 25 percent below the long period average (LPA).
"Below normal rains are expected to weigh heavily on investor sentiment," according to a report by brokerage Angel Broking.
Said Sajjan Jindal, president of the Associated Chambers of Commerce and Industry (Assocham): "If the monsoon deficiency increases to 22 percent, the agriculture sector could post a negative growth of 6 percent and the overall GDP (gross domestic product) growth could decline to 4.7 percent."
Of the 13 sectoral indices on the BSE, auto, FMCG and capital goods stocks lost the most as these came under greater selling pressure. IT and telecom stocks, however, found favour among buyers.
The market breadth was negative with 850 stocks advancing, 1,800 declining and 76 remaining unchanged.
Among gainers on the Sensex were TCS, up 6.02 percent at Rs.538.85; Wipro, up 2.8 percent at Rs.512.85; Infosys, up 2.2 percent at Rs.2,086.80, and Tata Power, up 2.12 percent at Rs.1,251.30.
Prominent among the losers were M&M, down 9.12 percent at Rs.758.10; ACC, down 6.52 percent at Rs.809.95; Hero Honda, down 3.8 percent at Rs.1,425, and Hindustan Unilever, down 3.48 percent at Rs.260.45.
According to data with the regulator, the Securities and Exchange Board of India (SEBI), foreign institutional investors sold shares worth $176.8 million Monday.
In other Asian markets, the Nikkei 225 Stock Average, a key index of the Tokyo Stock Exchange, broke its 10-month high to close at 10,524.26 points, up 112.17 points.
Better than expected job loss data from the US and a rise in Japanese machinery orders in June helped the benchmark index rise.
The Hang Seng, the primary index of the Hong Kong Stock Exchange, also shut shop in the green at 20,929.52 points, up 554.15 points.
Futures of key US stock indexes were trading lower, pointing to a lower opening by the main indices, after rising for more than four weeks.