"The markets are struggling to go up because of North Korea tensions," said Deven Choksey, promoter of KR Choksey.
Sensex closed 189.98 points or 0.59 per cent lower at 31,702.25
"Banking stocks such as HDFC Bank are a bit highly valued and are seeing some corrections," Choksey said.
HDFC Bank Ltd and Housing Development Finance Corp Ltd fell for a second straight session.
The Nifty Auto index fell 0.8 percent after gaining nearly 2 percent on Friday when most automakers reported August sales numbers.
IT major Infosys fell nearly 2 per cent.
Meanwhile, Coal India Ltd surged over 3 per cent after the miner said on Friday that the company along with its units produced 37.63 million tonnes of coal in August, beating its target of 36.96 million tonnes.