The S&P BSE Sensex plunged over 300 points, while the Nifty extended intraday losses and fell below support of 5,800 in afternoon trade on Wednesday, after profit booking by institutional investors strengthened the US dollar against the rupee.
The rise in global crude oil prices - on the back of upbeat economic data in the US and political tension in Egypt - has also raised concerns over India's current account deficit.
Benchmark crude climbed $2.20 to $101.80 per barrel in early morning trade in Asia, Associated Press reported. Brent crude also saw an increase of $1.45 to $105.45 a barrel on the ICE futures exchange in London.
The rupee fell below 60 per dollar mark on heavy demand for the greenback. The partially convertible rupee was at 60.12, down 46 paise, against its previous close in trade today.