The session started on a firm note with Sensex hitting a life-time high of 39,572, but it failed to hold on to the early gains and ended over 380 points lower.
The S&P BSE Sensex closed 382.87 points or 0.97 per cent lower at 38,969.80 and the broader Nifty fell by 119.15 points or 1.01 per cent. The Bank Nifty and the Nifty index also hit a 52-week high.
"The market gave up the gains after testing a new high as the positive sentiment on exit polls was gradually priced-in. The pre-election rally may continue, and quality mid & small caps may out-perform if the election verdict comes in tandem with the exit polls," said Vinod Nair, Head of Research, Geojit Financial Services.
The downside risk in the market is likely to be protected in the near-term by the extension in economic reforms and the pick-up in earnings. Already the global peers are trading positive with signs of ease in trade tensions," Nair added.
Shares of Tata Motors fell 7.05 per cent on the BSE after it reported a weak set of numbers for the quarter ended March 2019. Its consolidated net profit fell by 49 per cent to Rs 1,108 crore.
Dr Reddy's Laboratories shares rose 4.45 per cent on Monday's correction of created value-buying opportunities for the investors.
Shares of Jet Airways rallied 14.73 per cent on reports of Hinduja Group's likely bid for the grounded airline this week after it received approval from the airline's key stakeholders, including founder Naresh Goyal and Etihad Airways, said Deepak Jasani of HDFC Securities.