Indian stock-index futures dropped after the nation’s currency sank to a record low, with the benchmark equity index poised to enter a technical correction.

SGX CNX Nifty Index futures for August delivery fell 0.8 percent to 5,368 at 10:12 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index tumbled 1.7 percent to 5,414.75 yesterday, the lowest level since Sept. 11, 2012. The S&P BSE Sensex also plunged 1.6 percent, capping the biggest two-day slide since February 2009. The Bank of New York Mellon India ADR Index of U.S.-traded shares slumped 3.6 percent. The rupee sank as low as 63.23 yesterday. One-month rupee forwards dropped to an all-time low of 64.60 today.

The Sensex extended a decline from this year’s high on July 23 to 9.8 percent amid concerns policy makers’ efforts to contain a record slump in the rupee will hurt economic growth. UBS AG says a drop in the currency to 70 per dollar is possible and Credit Suisse Group AG sees a decline to 65 as slow growth and a record current-account deficit leave Asia’s third-biggest economy vulnerable to outflows and as the U.S. prepares to pare monetary stimulus. Citigroup Inc. cut its year-end forecast for the Sensex to 18,900 from 20,800 in a report dated today.

“Market sentiment has turned weak after the rupee continued to drop despite a number of steps from RBI to curb the currency fall,” Nidhi Saraswat, senior research analyst at Bonanza Portfolio Ltd., wrote in an e-mail yesterday.

Support Measures

The Reserve Bank of India has since mid-July raised two interest rates, tightened lenders’ access to cash, increased duty on precious metal imports, targeted foreign-currency outflows and boosted efforts to lure investment to steady the weakening currency.

“The rupee is at the risk of completely losing its anchor,” Bhanu Baweja, the global head of emerging-market cross-asset strategy at UBS AG, said in an interview with Bloomberg TV India yesterday. “You’re in a situation where no rupee forecast is sacrosanct.”

The RBI estimates India’s economy may expand 5.5 percent in the year ending March 2014, compared with 5 percent in the previous 12-month period, the slowest in a decade. That trails the 10-year average of about 8 percent, as well as the performance of regional nations from Indonesia to the Philippines.

The Sensex has lost 5.8 percent this year and trades at 12.9 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10 times. The index’s 30-day volatility rose to the highest since April 2012 yesterday.

International investors sold a net $ 81 million of Indian (SENSEX) shares on Aug. 16, data from the regulator show. That pared this year’s inflow to $ 12.5 billion, the data show. Foreigners pulled $ 3 billion from stocks and bonds last month.

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