The benchmark S&P BSE Sensex slumped almost 3% on Monday amid a deepening global sell-off, precipitated by fears that the U.S. economy may tip into a recession. Japan’s Nikkei index plunged 12.4%, its biggest one day drop since October 1987, while the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite declined 2.2%, 2.5% and 3.1%, respectively, as of 1404 GMT.

The Sensex slid 2,222.55 points, or 2.74%, to close at 78,759.40. Losses were led by Tata Motors, which fell 7.3%, Adani Ports (5.9%), Tata Steel (5.3%), State Bank (4.3%), Power Grid (4.25%) and Maruti (4.17%).

The NSE’s Nifty-50 fell 2.68% to 24,055.60.

“In the backdrop of weak global sentiment, the benchmark indices corrected sharply,” said Shrikant Chouhan, Head - Equity Research, Kotak Securities. “All the major sectoral indices traded in the red, with metals and realty indices correcting sharply,” he added.

“Technically, after a long time Nifty and Sensex closed below the 20-day Simple Moving Average (SMA), which is largely negative,” he observed.

The Indian rupee fell to its all-time low of 84.09 against the U.S. dollar, weakening by 37 paise in the session as the equity sell-off and foreign fund outflows weighed on sentiment in the currency.

“The rupee has experienced a significant decline, marking a new all-time low,” said Jateen Trivedi, VP and Research Analyst - Commodity and Currency, LKP Securities. “This decline comes amid fresh economic concerns, including the appreciation of the Japanese yen due to rising interest rates in Japan for the first time since August 2006,” he added.

“This rate hike has triggered a sell-off in risky assets, causing panic among borrowers. The rupee’s weakness persists despite a sharp drop in the dollar index from $104 to $102.20, and a significant decline in crude prices from $78 to $72 in WTI. The main factors contributing to the rupee’s fall are the sell-off in capital markets and fund outflows, which have also affected other global currencies,” Mr. Trivedi said.

“The rupee is expected to face volatility, with a trading range between 83.75-84.20,” he added.