Key stock indices Sensex and Nifty declined by more than 1 per cent in the early trade on Monday due to deep losses in financials, IT and auto stocks amid lingering worries over the emergence of the new COVID variant Omicron.

The 30-share BSE Sensex tumbled by 585.22 points or 1.02 per cent to 56,521.93 points with 25 of its components trading in the red.

The broader Nifty of the National Stock Exchange tanked 191.40 points or 1.12 pc to 16,835.05 as Adani Ports, Tata Motors and Hero MotoCorp dropped.

Among Sensex stocks, HDFC fell by 1.61 per cent, HUL by 1.22 per cent, and Maruti by 0.88 per cent.

Asian Paints, Bajaj Auto, UltraTech Cement, ITC, HDFC Bank, ICICI Bank, Infosys, and SBI were among the major losers.

Bucking the trend, IndusInd emerged as the lead gainer rising by more than 1 per cent after the Reserve Bank of India (RBI) allowed promoters to hold 26 per cent stake in private banks after 15 years.

Bharti Airtel and RIL also advanced, limiting losses in the index.

FII investors were net sellers in Indian stocks as they sold equities worth Rs 5,785.83 crore on net basis last Friday.

Asian markets were also down as investors continued to assess the risks to the economic recovery posed by the new COVID variant Omicron.

Japan's Nikkei 225 dropped 0.47 per cent, Hong Kong's Hang Seng Index declined by 0.34 per cent and China's Shanghai Composite was down 0.42 per cent.