Market gives up Modi momentum, Sensex plunges 418 points

Mumbai: India's stock markets dropped to their weakest since before the election of Prime Minister Narendra Modi while the rupee slumped to 2013 crisis levels on increasing concerns the country will be hit hard by the growing turmoil in global markets.

The falling stock prices reflect investor worries over slumping crude prices and volatility in China's markets that continue to trigger concerns about the health of the global economy.

The Sensex fell 2.36 percent, slipping below 24,000, to its lowest since May 16, 2014, a day when poll results declared Prime Minister Narendra Modi's National Democratic Alliance victorious in a landslide national election.

The Indian rupee dropped to as low as 68.12 per dollar, its weakest since Sept 4, 2013 and not far from a record low of 68.85 hit in August of the same year.

The rupee was trading 0.69 percent lower at 68.11 against the dollar.

The broader Nifty fell as much as 2.39 percent below the key 7,300 level, its lowest since June 2, 2014.

Foreign investors have sold a net around USD 847 million worth debt and equities so far this month, a third straight month of outflows.

"I don`t think there`s too much pain ahead. A pullback is expected from these levels. I think too much bearishness has been factored in," said Ashtosh Raina, head of FX trading at HDFC Bank.

"The FII outflows are not that big to warrant such a fall. And the RBI is there to stem the flow because they are well equipped to handle and won`t let it go out of hand," Raina said.

Both the NSE and BSE indexes have fallen over 20 percent from their all-time highs in 2015.

Most blue chips, which have substantial foreign investor holdings, fell.

Reliance Industries dropped 4.7 percent, HDFC Bank slipped 2 percent, while ICICI Bank lost 3.1 percent.