The NSE Nifty dropped sharply by 151 points, its biggest single-day loss in past six months, to close at 11,438 due to heavy losses in energy, financials and pharma stocks.
The fresh trade war spat between the US and China after Donald Trump threatened to impose additional tariffs on USD 267 billion worth of Chinese products dampened investors sentiments.
The rupee touching a life-low of 72.67 per dollar, forcing the government to consider measures to soften the fall after the current account deficit widened to most in five years also hit the sentiment. Rupee had declined nearly 15 percent against the dollar this year.
"The persistent weakness in the Indian rupee is now starting to show its impact on all asset classes including the equities. The 'sentiment risk' is now the major challenge for stock markets," Jagannadham Thunuguntla, Sr VP and Head of Research (Wealth), Centrum Broking Limited said.
Overseas, shares in Europe struggled to make gains while most Asian shares ended lower, as trade tensions between the US and China remained in focus.
The Nifty 50 index fell 151 points or 1.30 per cent to end at a three week low of 11,438.10. As many as 42 constituents declined while eight advanced.
Losses in index major HDFC Bank, HDFC and Sun Pharma dragged the barometer to a three-week low levels.
Bajaj Finance, IndiaBulls Housing Finance, BajajFinsv, Mahindra&Mahindra, Vedanta Ltd, Hindalco and UltraCemCo were among the major losers
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