The Sensex has lost almost 25% of its value since May 10

Bombay's benchmark Sensex index ended 334 points down at 9,476 as all but one of its 30 members finished in the red.

Traders said that economic worries meant many investors were losing their appetite for riskier emerging markets.

Indian shares have fallen sharply since 10 May, when the benchmark index reached a record high of 12,612 points.

'Distinct nervousness'

Analysts said that markets are likely to be very volatile until there is more visibility about the state of global growth and the direction of interest rates in the US - the world's biggest economy.

Monday's declines came after the Sensex posted its biggest daily gain on Friday, surging 5.5%

"The markets could not sustain Friday's record gains," said Naresg Garg, chief investment officer with private sector investment group Sahara Mutual.

"There is still distinct nervousness," he added.

This was reflected in the sale of blue-chip companies as investors questioned whether their recent gains had gone too far, too quickly.

Leading the drop were Bajaj Auto, down 7.1%, and bank ICICI, down 6.6%. Hindustan Lever also declined.

As well as the Sensex, the rival S&P Nifty Index, which lists 50 firms, fell 89 points to 2,777.