Equity benchmarks Sensex and Nifty surrendered early gains to close with deep losses on Monday, snapping their two-day winning streak as investors pared exposure to banking, metal and FMCG stocks amid a weak trend in global markets.

The 30-share BSE Sensex tanked 670.93 points or 0.93 per cent to settle at 71,355.22. During the day, it fell 725.11 points or 1 per cent to 71,301.04.

The Nifty declined 197.80 points or 0.91 per cent to 21,513.

"Nifty snapped a two-session rally to end lower after opening with marginal gains. Global stocks slipped on Monday ahead of a busy week of inflation and economic data and amid the diminishing prospect of a cut in US interest rates in the first quarter. Stocks fell ahead of a corporate reporting season where robust results are needed to justify high valuations," said Deepak Jasani, Head of Retail Research at HDFC Securities.

Among the Sensex firms, State Bank of India, ITC, Nestle, Asian Paints, Tech Mahindra, Mahindra & Mahindra, Tata Consultancy Services and Hindustan Unilever were the major laggards.

In contrast, HCL Technologies, Power Grid, Sun Pharma, NTPC, Bajaj Finance and Titan were the gainers.

In the broader market, the BSE midcap gauge declined 0.87 per cent and smallcap index dipped 0.36 per cent.

Among the indices, FMCG fell 1.55 per cent, commodities declined 1.44 per cent, bankex (1.42 per cent), metal 1.40 per cent, financial services (1.05 per cent), telecommunication (0.93 per cent), IT (0.90 per cent) and teck (0.77 per cent).

Power, realty and services were the gainers.

"The market witnessed widespread selling as the euphoria over early rate cuts may diminish due to the better-than-expected non-farm payroll data from the US and the consequent rise in the US 10-year yield.

"In the near term, investors' trade positions will be more inclined towards the upcoming result season. While the outset may be tempered by lower expectations in the IT sector, the overall forecast for earnings growth remains optimistic, projecting double-digit figures," said Vinod Nair, Head of Research, Geojit Financial Services.

In Asian markets, Seoul, Shanghai and Hong Kong settled lower. Japan's Nikkei was closed for a holiday.

European markets were trading lower. The US markets ended marginally up on Friday.

"The market witnessed widespread selling as the euphoria over early rate cuts may diminish due to the better-than-expected non-farm payroll data from the US and the consequent rise in the US 10-year yield. In the near term, investors' trade positions will be more inclined towards the upcoming result season," said Vinod Nair, Head of Research at Geojit Financial Services.

Global oil benchmark Brent crude declined 1.21 per cent to USD 77.81 a barrel.

Foreign Institutional Investors (FIIs) bought equities worth Rs 1,696.86 crore on Friday, according to exchange data.

The BSE benchmark jumped 178.58 points or 0.25 per cent to settle at 72,026.15 on Friday. The Nifty climbed 52.20 points or 0.24 per cent to 21,710.80.