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Indian shares fell on Monday, pulled down by information technology (IT) stocks and as investors likely booked profits after a record-breaking run last week.

The blue-chip index NSE Nifty 50 settled 0.41% lower at 22,122.05, after hitting record highs in each of the five sessions last week. The BSE Sensex lost 0.48% to 72,790.13.

The broader, more domestically-focussed small-caps and mid-caps shed 0.26% and 0.36%, respectively.

The drop today is because of normal profit booking that has been happening above 22,000 levels for the Nifty, said Kranthi Bathini, equity strategist at WealthMills Securities, adding that such bouts are "part and parcel" of the bull market.

Nine of the 13 major sectors logged losses.

IT stocks declined 1.17%, ahead of a key U.S. inflation reading later in the week, which could influence the Federal Reserve's future rate trajectory. IT companies earn a significant share of their revenue from the U.S.

If U.S. inflation remains elevated, it will force the Fed to switch back to a more hawkish policy stance, which will weigh on IT stocks, said analysts at Systematix Institutional Equities.

Asian markets were subdued ahead of key inflation readings, including from Japan and Europe, later in the week. [MKTS/GLOB]

Among individual stocks, Asian Paints lost about 4%, the most on the Nifty 50, and continuing its decline since Grasim launched its paints business on Feb. 22.

Alkem Laboratories fell 6.6% after a report said India's income tax department found "bogus" tax claims worth over 10 billion rupees (about $121 million). The drugmaker has denied the allegations of tax evasion.

Larsen and Toubro gained 2.43% on hopes of margin improvement for the March quarter. The company's construction business also bagged an order worth between 10 billion rupees and 25 billion rupees.

Paytm jumped 5% after regulators took steps that could ensure the embattled fintech would continue processing digital payments.

($1 = 82.8900 Indian rupees)