By Darshana Sankararaman
REUTERS - Indian shares fell more than 1.5 percent on Friday, tracking losses in Asian markets, on fears that incoming U.S. President Donald Trump's policies would be inflationary, leading to higher U.S. interest rates and denting the appeal of emerging markets.
U.S. bond yields have surged after Trump's election on worries his policies stance - from protectionism and fiscal expansion - will boost inflation and lead the Federal Reserve to raise interest rates more than expected.
Higher U.S. interest rates could make emerging markets less attractive for global investors, sparking outflows and hitting currencies such as the rupee.
The partially convertible rupee was at 67.0400 per dollar versus its previous close of 66.6250. It fell as low as 67.2000, its lowest since Aug. 29, earlier in the day.
"The larger cause of worry is with the currency. In global markets, some of the currencies are getting hit very badly against the dollar, resulting in significant amount of economic damage to those countries," said Deven Choksey, managing director at KR Choksey Securities.
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The Nifty was 1.75 percent lower at 8,376.35 by 0641 GMT, and was down 0.68 percent for the week.
The Sensex was 1.65 percent lower at 27,062.58, and was down 0.77 percent for the week.
Only three stocks on the NSE index were in positive territory.
The Nifty bank index dropped as much as 1.41 percent, after a four-session winning streak on the back of hopes that India's unexpected push to withdraw larger banknotes from circulation would lead to a surge in lenders' cash positions.
ICICI Bank Ltd and Yes Bank Ltd were among the biggest percentage losers on the index.
The Nifty IT index fell 2.51 percent, heading for its biggest weekly fall since mid-February, on worries about what Trump's election would meant for the export-dependent sector.
HCL Technologies Ltd and Tech Mahindra Ltd fell 4.39 percent and 3.06 percent, respectively.
Among gainers, Sun Pharmaceutical Industries Ltd rose as much as 6.27 percent after the world's fifth biggest generic drug maker on Thursday reported better-than-expected profit for the July-September quarter.
(Reporting by Darshana Sankararaman in Bengaluru; Editing by Subhranshu Sahu)