MUMBAI: Wednesday to their lowest levels in over 4 months as the India rupee dropped to a record low reinforcing uncertainty about the country’s fiscal and economic fundamentals at a time of steep global risk aversion.

The rupee fell to a record low 54.52 against the dollar surpassing the previous record low of 54.30 hit in mid-December, as worries about the euro zone intensified as Greece gears up for new elections.

“I think the rupee is likely to touch 56 to the dollar by June-end. As of now, the only support can come from the Reserve Bank of India. There is no dollar supply in the market and exporters are not selling,” said Deepak Kundu, dealer FX and rates, ING Vysya in Mumbai.

India is seen particularly vulnerable at a time of global risk aversion given the concerns about its fiscal and current account deficits, and slowing growth at a time of persistently high inflation.

Domestic stocks have tumbled 13 per cent since hitting a 2012 peak in mid-February, compared to a 10.7 per cent fall in the MSCI Asia-Pacific ex-Japan index during the same period.

“This is a big negative,” said Jagannadham Thunuguntla, a strategist at SMC Global Securities in New Delhi, referring the rupee and adding it would raise concerns among foreign investors.

“The outlook is appearing to be quite bleak. I think the stock market is open to a 5-10 per cent downside in the next month or two.”

The country’s main 30-share BSE index fell 1.83 per cent to 16,030.09 while the broader 50-share NSE index lost 1.71 per cent to 4,858.25 points.

Bank of America-Merrill Lynch said it expects the BSE index to drift to 15,000, given economic growth and current account concerns and noting business confidence was below the Lehman crisis levels.

Although a weaker rupee should help exporters, analysts said overall sentiment was being trumped by concerns foreign investors would exit India in light of the global risk aversion and the domestic challenges.