Asian markets fell Monday as concerns surrounding Greece exiting the euro zone and German Chancellor Angela Merkel's party losing the state election dampened sentiments.

Hong Kong's Hang Seng lost 1.15 percent, or 229.59 points, to 19735.04. South Korea's KOSPI fell marginally to 0.18 percent, or 3.40 points, to 1913.73. While Japan's Nikkei Stock Average gained slightly by 0.23 percent or 20.53 points to 8973.84, Chinese Shanghai composite index fell 0.60 percent or 14.26 points to 2380.73.

Market sentiment was negative as Greece struggled to form a government after voters rejected further austerity measures. The chance of another general election to be held in June is increasing as the moderate Democratic Left party of the country rejected joining other parties, which support the austerity measures, to form a government.

The Greek finance ministry has already indicated that it might run out of money by the end of June if the country receives no further bailout payments. The euro zone policymakers could withdraw the rescue package and refuse to provide emergency loans for the Greek banks until Greece adheres to the bailout terms. Greece would then face devastating bank runs, prompting the collapse of its banking system and an exit from the euro zone.

Euro zone finance ministers are meeting Monday and are expected to discuss the latest Greek developments and also potential pro-growth measures.

The report that Chancellor Angela Merkel's conservatives are losing the election in North Rhine-Westphalia, which is the country's most populous state, has also affected the market. The election result, which is seen as voters' rejection of further austerity measures, comes when Merkel is set to meet France's newly elected Socialist president Francois Hollande later this week. In the meeting, Hollande, who supports more growth oriented measures in Europe, is expected to urge Merkel to change the pro-austerity strategy.

India's BSE Sensex fell 0.57 percent or 93.14 points to 16199.84 as inflation rose unexpectedly in April to 7.23 percent compared to last year, weakening prospects of further loosening the monetary policy to regain the economic growth momentum.