MUMBAI (Reuters) - Indian stocks dropped and the rupee fell on Wednesday as uncertainty sparked by the country's move to withdraw larger banknotes from circulation was compounded by bets that Republican candidate Donald Trump was leading in the U.S. elections.
However, bonds gained sharply on a safe-haven bid and on hopes the unexpected move by Prime Minister Narendra Modi on Tuesday would ease inflation, opening the prospect of more rate cuts from the central bank.
The broader NSE Nifty was down 4.1 percent, while the benchmark BSE Sensex was down 3.9 percent as of 0400 GMT.
Meanwhile the partially convertible rupee was at 66.87 per dollar versus its previous close of 66.6150/6250, but the benchmark 10-year bond yield dropped 11 basis points in early trade to 6.69 percent.
(Reporting by Swati Bhat)