Benchmark equity indices Sensex and Nifty stayed on the back foot for the second straight session on Monday due to selling in auto, utility and commodity shares amid high valuation concerns and fresh foreign fund outflows.

In a volatile trade, the 30-share BSE Sensex declined 139.58 points or 0.21 per cent to settle at 65,655.15. During the day, it fell 246.93 points or 0.37 per cent to 65,547.80.

The Nifty dropped by 37.80 points or 0.19 per cent to 19,694 as 27 of its components closed in the red, 21 in the green and two unchanged.

Among the Sensex firms, Bajaj Finance, Mahindra & Mahindra, UltraTech Cement, Bajaj Finserv, Asian Paints, Hindustan Unilever, Tata Motors and JSW Steel were the major laggards.

Bharti Airtel, Wipro, HCL Technologies, Tech Mahindra, Tata Consultancy Services and Maruti were among the gainers.

"Elevated long-term interest rate trends and a weakening global economy continue to hurt inflows and market movement. While the recent softening of inflation in the US & India and the negative trend of crude are expected to help the view on global equity and India in the short term.

"In that context, the ease in FII selling is helping the domestic markets but continues to consolidate primarily due to India's premium valuation relative to global peers," said Vinod Nair, Head of Research at Geojit Financial Services.

In this scenario, the IT sector is benefiting; however, valuation continues to be on the higher side compared to long-term history, suggesting a cautious approach in the sector in the medium term, he added.

A mixed trend was witnessed on the sectoral front wherein IT posted decent gains while auto and metal ended in the red.

In the broader market, the BSE smallcap gauge climbed 0.39 per cent and midcap index dipped 0.06 per cent.

Among the indices, auto fell 0.69 per cent, commodities declined 0.66 per cent, capital goods (0.43 per cent), realty (0.33 per cent) and consumer discretionary (0.30 per cent).

Energy, healthcare, IT and teck were the gainers.

In Asian markets, Seoul, Shanghai and Hong Kong settled in the green, while Tokyo ended lower.

European markets were trading on a mixed note. The US markets ended with marginal gains on Friday.

Global oil benchmark Brent crude climbed 0.74 per cent to USD 81.21 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 477.76 crore on Friday, according to exchange data.

The BSE benchmark declined 187.75 points or 0.28 per cent to settle at 65,794.73 on Friday. The Nifty slipped 33.40 points or 0.17 per cent to 19,731.80.

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