Bombay Stock Exchange in Mumbai (BSE)
The S&P BSE Sensex dropped 1.6 per cent to 57,178.77 [Pictured: A bronze bull statue at the entrance to the Bombay Stock Exchange in Mumbai.] Image Credit: Bloomberg

Bengaluru: Indian shares fell about 2 per cent on Monday in broad-based selling as investors shunned equities on renewed worries over global economic growth. The Indian rupee sank to a fresh record low on Monday at 81.575 against the US dollar.

INR to UAE dirham rate was at 22.2 per dirham as of Monday morning. 

The NSE Nifty 50 index fell 1.8 per cent to 17,019 as of 9am (UAE time), while the S&P BSE Sensex dropped 1.6 per cent to 57,178.77 The sterling slumped to a record low on Monday as investors piled in to dollars and out of almost everything else, spooked by the prospect of high interest rates and poor growth ahead.

Last week, the United States and half a dozen other countries raised interest rates.

RBI set to hike rates

Meanwhile, the Reserve Bank of India is set to raise interest rates again this week with a slim majority of economists in a Reuters poll expecting a half a percentage point hike and some others expecting a smaller 35 basis point rise.

"The selling is basically driven by global cues, which remains weak. Market is already building in a 50 basis points hike from the RBI this week," said Gaurav Dua, head of capital market strategy at Sharekhan.

"Earlier it was expected that the RBI will take a pause.

However, given the firming up of food prices, market is now building another 35 basis point hike after this, which is affecting sentiment," Dua said.

Analysts also flagged that foreign investor selling might take the cushion off the markets. Foreign institutional investors sold net INR 29 billion ($355.57 million) worth of Indian equities on Friday as per provisional data available with the National Stock Exchange.

The Nifty metals index fell 4.2 per cent, auto index dropped 3.7 per cent, while the energy and bank indexes were down 3.1 per cent and 2.4 per cent, respectively.

Nestle India was the top gainer in Nifty 50 index, rising 1.6 per cent, while Hindalco Industries fell the most, with 6 per cent drop.

Shares of precision engineering company, Harsha Engineers jumped 47 per cent on their debut in Mumbai markets.