The Sensex and the Nifty fell to their lowest close in 2-1/2 weeks as software stocks slumped on caution ahead of India's top IT services provider Tata Consultancy Services' earnings report later in the day.
Overseas investors, the primary drivers behind the stock market gains, sold cash shares worth Rs. 21.63 crore ($3.59 million) and equity derivatives worth Rs. 1,218 crore on Tuesday - their second straight session of selling.
There is position squaring happening in stock markets ahead of the election outcome and we will see position adjustments in the rupee too. The election result is the key factor for all markets now.
The rupee closed at 60.37/38 per dollar compared with 60.23/24 on Tuesday. The unit moved in a range of 60.20 to 60.43 during the session.
Gains in other Asian currencies after strong China growth numbers, however, limited the fall in the rupee.
The South Korean won led a rebound among emerging Asian currencies on Wednesday after better-than-expected Chinese first-quarter growth data eased concerns over a sharp slowdown in the world's second-largest economy.
In the offshore non-deliverable forwards, the one-month contract was at 60.75 while the three-month was at 61.53.