The crisis also had a measurable impact on the Indian financial markets, with equity prices witnessing sharp decline on account of large net sales by FIIs in the backdrop of worsening macroeconomic environment and bearish outlook on earning growth of Indian corporates.
Further, moderation in capital flow coupled with widening trade deficit led to a sharp fall in the INR-USD exchange rate to touch an all time low of 54.30 on December 15, 2011. Reserve Bank has taken a number of measures to contain the excessive volatility in the foreign exchange market.