The Bombay Stock Exchange Sensex fell 698.86 points to 26,818.82 and the National Stock Exchange Nifty closed 229.45 points lower at 8,296.30 as markets reacted to the government’s demonetisation of high-value currency notes, as well a rise in the value of the American dollar. The rupee fell by 59 paise to 67.22 against the dollar during trading, NDTV reported.

Markets also reacted to reports that the US Federal Reserve could hike its policy rates in December because of stabilisation in the country’s share markets . The BSE Midcap and Smallcap indices fell between 3%-4%, according to the Business Standard. The overall market movement remained negative with 2,218 shares on the BSE ending lower. During early morning trade, the Sensex was trading over 400 points down, while the Nifty50 sank below the 8,400-mark before recovering slightly.

Chief Executive Officer and Managing Director of ICICI Prudential Mutual Fund Nimesh Shah said the government’s demonetisation move was a “good step for the Indian economy in the long run”. “However, given the size of the cash economy in India, a step like demonetisation could result in some short-term problems,” he said.

Similarly, founder of Old Bridge Capital Management Kenneth Andrade said Indian markets had been “hit by multiple events like [the] US elections and demonetisation”. “On the global front, we have to wait and watch how the US policy action pans out,” Andrade added.s

The weak trading is seen as a fallout of the mixed cues dominating Asian markets, after the frenzy over Donald Trump’s victory in the United States presidential election subsided. The rupee was trading at nearly 50 paise lower, hovering around Rs 67 against the dollar.