A broker reacts while trading at a stock brokerage firm in Mumbai November 11, 2008.
A broker reacts while trading at a stock brokerage firm in Mumbai November 11, 2008.Reuters

Indian stock markets ended sharply lower on Friday with the Nifty falling below the 5600 level, as sentiment was weighed down by weak rupee which has hit a new all-time low against the US dollar.

The benchmark BSE Sensex slumped 3.87 percent, or 749.39 points, to 18,618.20. The 50 share NSE Nifty tumbled 3.92 percent, or 225.35 points, to 5,516.95.

Markets opened on a weak note, tracking negative cues from Asian peers and Wall Street overnight. Sensex has snapped four day winning streak and lost nearly 700 points in afternoon trade as weak rupee weighed on the investor sentiment.

The Indian rupee plunged to a record low of 62.03 against dollar by late-afternoon trade on Friday as central banks' recent measures to limit foreign-currency outflows from local companies and residents were seen as unlikely to prop up the currency. The rupee had hit its earlier all-time low of 61.80 on 8 August.

"The RBI steps might be perceived as being regressive and tantamount to quasi-capital controls. Despite being put forth as a temporary measure, uncertainty over more such action is likely to remain and possibly lead foreign investors to rethink plans to invest on fear of controls," Radhika Rao, an economist at DBS Bank Ltd. in Singapore, wrote in a research report, Bloomberg reported.

All the 13 BSE sectoral indices experienced selling pressure and ended sharply lower. Consumer durables sector tumbled 8.52 percent and realty sector plunged 6.19 percent, while metal and capital goods sectors lost 6.13 percent and 5.14 percent, respectively.

Banking sector tumbled 5.44 percent, Yes Bank slumped 12.36 percent and Canara Bank plunged 9.78 percent, while Bank of India slipped 9.88 percent.

The overall market breadth is negative with 728 advances against 1582 declines on the BSE.

Meanwhile, Asian markets ended lower on Friday as rising US inflation and upbeat jobless claims data raised fears that the Federal Reserve would start scaling back its asset buying program as soon as in September.

Japan's Nikkei declined 0.75 percent and Hong Kong's Hang Seng declined 0.10 percent, while South Korea's KOSPI fell 0.20 percent and China's Shanghai Composite declined 0.64 percent.