The forex markets, which were expecting a slew of measures to tame the rupee over the weekend, were left disappointed once again, which dragged the rupee lower.

The rupee was down a staggering 70 paise at 72.50 to the dollar. All gains that were seen on Friday on hopes that the government will announce a host of measures, were undone.

The equity markets too plunged in line with the rupee with the Sensex once again dipping below the 38,000 levels mark at 37,726 points, a drop of 353 points over Friday's close.

Banking stocks were the worst hit with stocks like Axis Bank, State Bank of India and HDFC Bank leading the set of losers. The bank Nifty was down a huge 1.28 per cent in trade.

The stocks that managed to gain from the Nifty space were Wipro, Dr Reddy's Labs, Cipla and Sun Pharma.

Sentiments were adversely affected also after reports from Goldman Sach stating that India's world beating stock market run was over.

"The nation's equity market looks less favorable amid elevated valuations, a potential slowdown in economic growth and upcoming elections, according to Goldman Sachs analysts, who cut India to the equivalent of a hold rating from buy," a Bloomberg report stated.

Meanwhile, the 10 year yield once again gained at 8.16 per cent. Asian markets were weakas trade worries resurfaced after U.S. moved to place a further tranche of tariffs on Chinese goods.