At 12.15 the rupee traded 87 paise lower against the dollar, to hit the 57 mark, a level not seen before.
"The rupee is being driven lower by post (RBI) policy disappointment, the Fitch downgrade, and the absence of QE in the US. There is a serious erosion of confidence in Indian economy," Moses Harding of IndusInd Bank told NDTV Profit.
Cement stocks extended losses on the back of the stiff penalty imposed by the Competition Commission of India, which had fined 11 Indian cement companies in a price collusion investigation.
JP Associates (-5.2%), ACC (-4%), and Ambuja Cements (-3.5%) were the top three losers on the Nifty index.
Metal stocks (-2.2%) were the biggest underperformer as commodity prices fell on global risk aversion. Aluminium maker Hindalco (-3.3%), Tata Steel (-2.9%), and Sesa Goa (-2.5%) were among the big Nifty laggards.
Only 6 stocks traded higher on the Nifty index. Auto stocks saw some buying interest on falling crude prices. Maruti Suzuki (1.1%), the country's biggest car maker, was the top gainer. Two-wheeler makers like Hero MotoCorp and Bajaj Auto also gained.
The market breadth was weak, with only 34% stocks managing to advance on the broader BSE 500 index.