Amid a sell-off in global markets, Indian equities tumbled and the rupee fell sharply, the most since September 2013, after the government scrapped key laws over the disputed northern Indian state of Jammu and Kashmir that guaranteed autonomy. The depreciation in yuan due to escalating trade war also weighed on the sentiment.

The benchmark BSE (Bombay Stock Exchange) index closed 1.13 per cent lower at 36,699.84, after falling as much as 36,416.79. The Nifty futures index fell to a low of 10,782.60, before closing 1.23 per cent lower at 10,862.60.

The Indian rupee also witnessed its sharpest fall in 6 years. One dollar fetched 70.784 Indian rupee, up 1.58 per cent on day. The Indian currency weakened as much as 70.804 against the dollar. One Dirham fetched 19.27 Indian Rupees on Monday.

“Nifty seems to be targeting 10,500 levels on the back of weak local conditions and USD/INR 71.50 levels. CNYs decline beyond 7 will be a key factor that could have a bearing on the Indian rupee along with other Asian currencies,” Phaneendar Bhavaraju, Managing Partner & Chief Investment Officer at Arrow Capital DIFC told Gulf News.

The Sensex index has gained 1.75 per cent since January 1, and has been the one of the worst underperforming stocks in the emerging market index as signs of a slowdown in the economy and earnings resulted in outflows from foreign investors.

Indian equity markets witnessed an outflow of $2 billion in Jult, the highest outflow seen in an emerging market in the month. About 1.5 trillion of investor wealth has been eroded in the past one month.