DBS Bank estimates Q1 current account deficit at 4 per cent of GDP. India's widening CAD has pressured the rupee, which is off the record lows hit in August, but still hovering around 63 per dollar.
Rising imports of gold and crude oil have been the main drivers of CAD, which hit an all-time high of 4.8 per cent of GDP, or $88 billion, in FY 2013.
Shares also tracked global weakness as a shutdown of the U.S. government seemed increasingly likely, while the euro had political troubles of its own as the Italian government teetered on the edge of collapse. (Read: What is the US government shutdown)
Banking stocks fell on worries about higher non-performing loans and the possibility of RBI raising rates one more time with its new found focus on inflation, dealers said.
ICICI Bank traded 3 per cent lower, while State bank of India declined 1.9 per cent.
The benchmark Sensex has gained nearly 6 per cent so far in September, and is heading for its first positive monthly close since May, while rising 1.7 per cent for the September quarter as of Friday's close. The rupee is also on course for its best month in a year despite reverses today.
As of 11.15 a.m., the Sensex traded 219 points lower at 19,509, while the Nifty was down 66 points to 5,767. The rupee traded off the day's low at 62.78 per dollar.
Market analyst Sarvendra Srivastava told NDTV that 5,870-5,900 remains a resistance range for the Nifty and traders can sell for targets of 5,650-5,700 with stop loss at 5,906.
(With inputs from Reuters)
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