The Indian rupee touched 55.84 against the dollar Monday, its lowest mark in a week in morning trade, weighed down by heavy demand for the dollar by petroleum companies.

Global risk aversion also dragged down the rupee as the euro dropped to its lowest levels in 12 years against the yen and the Australian dollar on Monday trade.

The Indian stock markets - the 50-share NSE Nifty and 30-share BSE Sensex - were also trading in the red, hit by the negative global cues as the uncertainty in the Euro Zone mounted pressure on the global markets.

Sensex was at 16953.33, down 205 points or 1.20 percent and Nifty was at 5,139.85, down 65.05 points or 1.25 percent at 12:16 pm (local time). CNX Midcap index dipped 0.90 percent and BSE Smallcap index was down 0.63 percent. The market breadth was negative with 399 advances against 967 declines on the NSE.

Almost all sectoral indexes on the BSE were trading lower with metal (2.59 percent), realty (2.34 percent), capital goods (2.21 percent) and power (2.09 percent) being the major losers.

The major gainers on the BSE were Shriram Trans (2.80 percent), Zee Entertainment (2.40 percent), Ultratech Cement (1.75 percent and JPPOWER (1.63 percent) while major losers included Crompton Greaves (7.19 percent), Maruti Suzuki (5.90 percent), Pantaloon Retail (5.53 percent), Godrej Industries (4.37 percent) and Dish TVIndia ( 4.29 percent).

Maruti Suzuki shares plunged 5.60 percent as the company announced an indefinite shutdown of its Manesar plant following the violence at the plant. The company said that it would reduce its dependency on casual contractors in all lines of production from April 2013.

Shares of retail chains fell as the Left Front and the Samajwadi Party demanded the government to put off plans for allowing FDI in multi-brand retail sector till wider consensus was arrived on the matter.

Shares of Reliance Communications dropped Monday as the company's undersea cable unit postponed its Singapore IPO. The IPO was expected to bring in about $ 1 billion to the debt-ridden telecom carrier, enabling it to reduce its debt burden.