The rupee weakened against the dollar, while stocks slashed gains after Standard & Poor's warned India could become the first BRIC country to lose its investment-grade rating.
The local unit fell to a session low at 55.62/63 against the dollar after the announcement, while the Sensex cut gains of nearly 1 percent to trade flat on the day.
India's benchmark 10-year bond yield showed a more muted reaction, trading down 1 basis point at 8.34 percent from its previous close.
(Reporting By Mumbai markets team)
