The benchmark BSE Sensex crashed nearly 700 points and the NSE index Nifty ended below 8,300 level as investors feared higher US interest rates under incoming President Donald Trump will spark capital outflows.
Higher US interest rates could make emerging markets less attractive for global investors, sparking outflows and hitting currencies such as the rupee.
The partially convertible rupee was at 67.1400 per dollar versus its previous close of 66.6250. It fell as low as 67.2000, its lowest since August 29, earlier in the day.
The 30-share BSE index Sensex ended lower by 698.86 points or 2.54 per cent at 26,818.82 and the 50-share NSE index Nifty closed down 229.45 points or 2.69 per cent at 8,296.30.
All BSE sectoral indices ended in the red. Among them, auto index fell the most by 4.53 per cent, consumer durables 4.19 per cent, realty 4.00 per cent and FMCG 3.24 per cent.
Major Sensex losers were M&M (-6.02%), Adani Ports (-5.86%), ICICI Bank (-5.32%), Hero MotoCorp (-5.18%) and Asian Paints (-5.02%), while the only gainer was Sun Pharma (+3.3%).
“The larger cause of worry is with the currency. In global markets, some of the currencies are getting hit very badly against the dollar, resulting in significant amount of economic damage to those countries,” said Deven Choksey, managing director at KR Choksey Securities.
The Nifty bank index dropped as much as 1.41 per cent, after a four-session winning streak on the back of hopes that India's unexpected push to withdraw larger banknotes from circulation would lead to a surge in lenders' cash positions.
ICICI Bank Ltd and Yes Bank Ltd were among the biggest percentage losers on the index.
Among gainers, Sun Pharmaceutical Industries Ltd rose as much as 6.27 per cent after the world's fifth biggest generic drug maker on Thursday reported better-than-expected profit for the July-September quarter.
Global markets
Emerging market shares and currencies slumped on Friday as investors feared higher US interest rates under incoming President Donald Trump will spark capital outflows, while European bond yields were on course for their biggest weekly rise in a year.