Just as most equities trading on the Chinese mainland were in the midst of rebounding from the central bank's recent cash squeeze, news that authorities would soon resume IPO approvals crushed stock markets in Shanghai and Shenzhen once again Monday.

The Shanghai Composite Index dropped 48.93 points, or 2.44 percent, to finish at 1,958.27, while the Shenzhen Component Index surrendered 218.96 points, or 2.79 percent, to close at 7,637.63.

Combined turnover at the two exchanges dropped to 149.96 billion yuan ($24.41 billion), down from Friday's 169.4 billion yuan.

After a regulatory freeze that is now entering its ninth month, the China Securities Regulatory Commission (CSRC) is likely to restart IPO approvals at the end of this month, several local media outlets reported Monday.

According to analysts, an inflow of new stocks onto mainland bourses has reawakened anxieties about liquidity conditions, since these new offerings would only thin the cash now circulating in China's financial system.

Similarly, the upcoming sale of government bond futures after an 18-year hiatus has sparked concerns that capital may soon retreat from riskier assets to take shelter in these less volatile instruments.

All equity sectors were hard pressed Monday, yet ceramics and petrochemical stocks took the biggest tumbles, contracting by averages of 6.61 percent and 6.12 percent respectively.   

Despite the downward momentum, some individual shares in larger sectors were able to pull off gains. Sunny Loan Top Co, a Ningbo-based financial leaser, surged to the daily limit to end at 8.32 yuan.