This added to the already cautious mood ahead of the Union Budget to be presented on Saturday.
All the sectors ended in red except pharma, which surged by 1.5 per cent. Metals stocks were the biggest losers, declining over 3 per cent followed by banks, down 1.3 per cent and FMCGs.
The Sensex closed 458.07 points lower at 41,155.12 while the Nifty fell over 129.25 points to settle at 12,119 despite a sharp decline in global oil prices.
Global oil benchmark, the Brent crude index, fell over 2 per cent to $59.39 a barrel on Monday as the death toll due to coronavirus rose sharply to 80.
Market sentiments got dampened by rising concerns over fast-spreading coronavirus, as it might lead to slowdown in the global economy. Investors were also cautious ahead of Union Budget which is to be presented at the end of this week, said Siddhartha Khemka of Motilal Oswal Financial Services Ltd.
Further heavyweights like SBI, HUL, Bajaj Finance, Maruti, Bajaj Auto, Indian Oil, HUL among others would be announcing their results this week which would also keep markets busy, experts said.
Vinod Nair of Geojit Financial Services Ltd said: "Growing catastrophic effect of coronavirus is impacting the world financial market raising fears of a slowdown in the global economy. In India, investors are turning cautious given selling pressure in the global market and big event risk of budget announcement this weekend, since a lot has been factored in the market about wish list."
Chinese health authorities on Monday informed that 2,744 confirmed cases of pneumonia caused by coronavirus, including 461 in critical conditions, had been reported in the country.
A sharp adverse reaction from Asian, US and European stock markets has been witnessed because China is entering one of its busiest travel periods on account of its Lunar New Year holiday.
( With inputs from IANS )