The Sensex at the Bombay Stock Exchange had slumped 540 points, or 2.6 percent, to 20,107 in afternoon trade, a short while ago, as selling pressure intensified after the Reserve Bank unveiled its mid-quarter policy review. Earlier in the morning, the Sensex had fallen 60 points, or 0.3 per cent, to 20,586, as funds and investors booked profits ahead of the RBI's policy review.

Paring some of the initial losses, the rupee was down by 16 paise to 61.93 against the US dollar in the late morning trade. The rupee had resumed lower at 62.05 per dollar as against the last closing level of 61.77 at the Interbank Foreign Exchange Market.