At 9:38 am, the Sensex traded 74.27 points - or 0.20 per cent - lower at 37,808.52 while the Nifty was down 44.45 points - or 0.39 per cent - at 11,239.85.

Market breadth favoured losses with 634 stocks trading higher on the BSE against 888 struggling with losses. On the NSE, 596 shares advanced while 991 declined.

Top percentage laggards on the 50-scrip index at the time were Indiabulls Housing Finance, Bajaj Auto, Hero MotoCorp, JSW Steel, Vedanta Tata Motors and Maruti Suzuki India, trading between 2.68 per cent and 6.69 per cent lower.

HDFC Bank, Reliance Industries, HDFC And Maruti Suzuki were the top drags on Sensex.

On the other hand, ICICI Bank shares rose as much as 4.57 per cent in early deals, after the private sector banking major reported a net profit of Rs 1,908.03 crore for the quarter ended June 30. ICICI Bank had reported a net loss of Rs 119.55 crore for the corresponding period a year ago.

The Sensex and Nifty had declined 1.18 per cent each in the past week, with the benchmark indexes breaking a six-day losing streak - the longest stretch of losses in more than two months - on Friday.

The government ruled out reconsidering a plan to issue foreign currency overseas sovereign bonds, despite warnings of long-term risk for the economy.

Meanwhile, equities in other Asian markets drifted lower as markets anxiously counted down to a likely cut in US interest rates this week with much riding on whether or not the Federal Reserve signals yet more are in the pipeline.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4 per cent in slow trade. Japan's Nikkei dipped 0.5 per cent and Shanghai blue chips fell 0.2 per cent. E-Mini futures for the S&P 500 lost 0.1 per cent.