The BSE Sensex dropped over 240 points on Monday tracking the Indian rupee, which fell to a historic low against the dollar. The 50-share Nifty benchmark fell over 85 points to slip below the key 5,450 levels.
Indian markets have been spooked by the sharp fall in the rupee, which is the worst performing currency in Asia. The partially convertible currency fell to 62.35 today, surpassing the previous all-time low of 62.03 hit on Friday.
The rupee has fallen over 12 per cent since May leading to fears of increased inflation and has led to worries about financing of India's record current account deficit.
The central bank's recent measures, aimed at tightening liquidity, have hit interest rate sensitive stocks such as banks, autos and realty.
Private lender Axis Bank was the worst performer on the Nifty, falling 4 per cent. PSU lender Bank of Baroda declined over 3.5 per cent, while ICICI Bank - India's biggest private lender - traded 3 per cent lower.