The Nifty closed down 0.35% at 11,896.45, while the Sensex ended 0.37% lower at 40,558.49, both snapping four straight sessions of gains.
The Nifty Bank Index ended 0.61% lower, weighed down by losses in lenders HDFC Bank Ltd and ICICI Bank Ltd, which closed 1.07% and 1.76% lower, respectively.
The Nifty IT Index, which has gained 7.3% so far this month, ended the session 0.76% lower. Shares of Infosys Ltd ended the day 1.68% lower and was among the top drags.
"IT stocks are undergoing some profit-taking because of stretched valuations and we are not getting a clear picture for bank stocks because of moratoriums in place," said Anita Gandhi, director at Arihant Capital Markets.
Tata Consultancy Services shed 0.16%, after the company was reported to be a potential buyer for Deutsche Bank's IT services division, Postbank Systems.
Shares of conglomerate Reliance Industries closed down 0.8% and Dr.Reddy's Laboratories ended the day 0.4% lower after the drugmaker isolated all its data center services as a preventive measure following a cyberattack.
World shares slid to a two-week low as global COVID-19 cases surged and as U.S. President Donald Trump accused Democrats of being unwilling to craft an acceptable compromise on a COVID-19 stimulus bill.
(Reporting by Philip George in Bengaluru; Editing by Ramakrishnan M.)