Italian shares fell as much as 2 percent at the start of the trading on Monday, but regained their poise as investors look beyond the political risk of the referendum vote.
Most investors aren't expecting that the resignation of the Italian Prime Minister Matteo Renzi will lead to an early snap election and have shifted their main focus to the upcoming European Central Bank meeting.
"Investors are mindful that the market reaction after a number of political surprises this year, notably the Brexit vote and the US election, has been short-lived," Seamus Mac Gorain, portfolio manager at JP Morgan Asset Management, told CNBC via email. "Thus far market reaction has been generally calm and relatively marginal, as much of this had been priced in."
Prime Minister Matteo Renzi is handing in his resignation letter on Monday after losing a referendum to reform the constitution. Investors will be looking for signs of an early election but their attention is now on remarks by President Mario Draghi of the European Central Bank this Thursday, Andy Chaytor, head of European interest rates at Nomura, said over the phone.
Italian banks led the losses during Monday's early session, but most of their shares have returned to positive territory.
However, Unicredit, which saw its shares falling as much as 6 percent on Monday morning, is the worst performer among European banks. The Italian bank announced it is working on a deal with France's Amundi to sell its asset management arm for 3 billion euros ($3.19 billion).
"Unicredit was down initially for two reasons, firstly because it's an Italian bank and that was the default move early on. Secondly we are awaiting an announcement of the company's strategic plan that is due on Dec. 13. The Amundi move is seen as part of this overall plan and could indicate that we are looking towards a restructuring and cost cutting plan," James Hughes, chief market analyst at the online broker GKFX, told CNBC via email.
Shares of Banca Pop Milano, Banco Popolare and Intensa Sanpaolo were also trading in the red.
The troubled Monte dei Paschi di Siena has wiped out some earlier losses as investors seem less concerned that the outcome of the No vote will prevent the bank's recapitalization to proceed. There have been market fears that political instability in Italy could affect plans to make the Italian banking system more solid, creating risks for the wider euro zone.
"I think the feeling with BMPS is that aid is still coming despite what has happened here. It looks more likely every day that they will need it and I think the NO vote hasn't changed that feeling," Hughes added.