Reuters Market Eye - The Nifty falls 1.34 percent, breaking below its 200-day moving average, while the benchmark BSE Sensex is down 1.25 percent.
The rupee fell to a record low of 61.21 as an emerging markets sell-off after strong U.S. jobs data laid bare the currency's vulnerability and dependence on capital inflows to fund its record current account deficit.
Fears of foreign outflows are hitting both bonds and stocks.
Foreign investors have sold 476.22 billion rupees in debt and shares since the start of June, as per regulatory data.
Among blue chips, Reliance Industries Ltd falls 1.9 percent and Housing Development Finance Corporation Ltd is down 2.2 percent.
However, Reliance Communications Ltd gains 5.8 percent to its highest intraday level since January 5, 2011, after the company said it will spin off its real estate business into a separately listed unit.
(Reporting by Abhishek Vishnoi)