The Indian rupee dropped to fresh two-year low and the country's stock market benchmark Sensex plunged 1,092 points.

The rupee was trading at 66.46 down 63 paise to the US dollar compared to it previous close on Friday on the back of an appreciating dollar.

The bears continued to have a firm grip on the stock markets, amid weak global cues. At 10:38 am, the 30-share Sensex plunged 1,092 points to 26,274 and the Nifty slumped 338 points to 7,962.

All sectoral indices were in the red with Realty index down over 5 per cent followed by Oil and Gas, Power, Auto and Bankex down over 4 per cent each among others.

Asian shares and commodities weakened further on fears of economic slowdown in China. The benchmark Shanghai Composite extended losses and slumped over 9 per cent while the Hang Seng and Nikkei were down over 4 per cent while Straits Times was down 3.5 per cent.