A benchmark index of Indian equities markets tanked over 600 points or three percent as the rupee fell to a record low of 66 against a dollar.
There were also concerns over the widening of the fiscal deficit as the lower house of parliament Monday passed the Food Security Bill which will cost nearly $20 billion. Month-end dollar demand from importers dragged the currency lower, said traders.
The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 18,460.72 points, was trading at 17,948.43 points around 3.00 p.m., down 609.70 points or 3.29 percent from the previous day's close at 18,558.13 points.
The Sensex touched a high of 18,460.72 points and a low of 17,925.11 points during trade so far.
Except the information technology (IT) sector, all others were trading in the red. Heavy selling pressure was observed in banking index (bankex), capital goods, metal, automobile and fast moving consumer goods (FMCG).
The S&P BSE bankex plunged 578.12 points, capital goods index tanked 358.30 points, metal index dropped by 268.60 points, automobile index slipped 235.24 points and FMCG index dipped 219.43 points.
However, the IT index went up by 33.57 points.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading 194.10 points or 3.54 percent down at 5,282.40 points.
Markets reacted sharply after the Indian rupee slipped below 66 against a dollar. The government said there were domestic factors behind the currency crisis.
The partially-convertible rupee slumped to a new record low of 66.07 against a dollar at the inter-bank foreign exchange market in Mumbai, surpassing its previous record low of 65.56 against a dollar on Aug 22.
The currency later recovered at 65.75 against a dollar around 2.30 p.m.
There were also concerns over the effect the Food Security Bill -- entailing expenditure of nearly $20 billion -- will have on the current account deficit.
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