MUMBAI: The market witnessed a sharp drop on Monday as BSE Sensex fell 888.40 points or 3.25 percent  to 26,482.52. The NIFTY too dropped 243.80 points or 2.94 percent and was trading at 8,056.15 points.

The Sensex of the S&P Bombay Stock Exchange (BSE), which opened at 26,730.40 points, was trading at 26,477.67 points (at 9.16 a.m.) in the early session, down 888.40 points or 3.25 percent from the previous day's close at 27,366.07 points, IANS reported.

The Sensex touched a high of 26,730.40 points and a low of 26,359.53 points in the trade so far.

The Rupee that closed near 65.83 per dollar on Friday hit a 2-year low of 66.47 per dollar on Monday. The lowest was last witnessed in September 2013, Money Control reported.

However, Agam Gupta of StanChart Bank expects that the USD-INR will open higher in comparison with other emerging market currencies. "We will keep an eye on supply of U.S.D from local government banks but the move in global markets will remain key for the pair at the moment," Gupta said.

The sudden sharp fall has been witnessed amid the global carnage over shaken Chinese economy. Shanghai shares dropped 7.7 percent to a five-month low and lost over 10 percent in August, NDTV reported.