Low transmission fluid level can explain all of the symptoms you are experiencing, Shan. Other possibilities include a faulty component internal or external to the transmission. Finally, yours is a '96 -- the first year for the electronically-controlled automatic -- and it may not have been retrofitted with updates which were introduced into production in August of '96 which I believe address your issue, among other things.

If correcting the fluid level does not solve your problem, there is nothing you can do on your own, really. Proper diagnosis requires an advanced Mercedes HHT or comparable scanner and knowledge specific to your transmission. Therefore, I would recommend taking the car to a well-equipped Mercedes shop rather than a transmission specialist.