The forex reserves have been declining in the past few weeks as the Reserve Bank is selling the US dollar to contain rupee depreciation

On Wednesday, the Sensex extended losses for the third straight session, to end at a near two-month low as cautious investors pared their portfolios, ignoring positive global cues and recovery in rupee.

The rupee opened higher at 72.71 against its record closing low of 72.98 Tuesday and touched a session high of 72.34 in day trade as crude oil prices eased globally.

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Continuing its intermittent fall against the US dollar, the Indian rupee dived to another all-time low of 72.98 on Tuesday. The currency has lost over 13 per cent in value against the greenback since the beginning of the year.

While the Sensex fell 505 points or 1.33% to 37,585 level, the Nifty lost 137 points or 1.19% to 11,377 level. Subdued Asian and European markets due to escalating trade war between the US and China mainly led to a caution on domestic bourses, brokers said.

Despite steps such as withdrawing withholding tax on Masala bonds, allow some breathing space to foreign portfolio investors, and check non-essential imports and promote exports in order to arrest the decline in rupee, the local currency fell over 50 paise below the 72 level per dollar mark in trade today.

This is the second consecutive week of major fall in the reserves which indicates that the central bank has been selling the greenback to fight the fall in rupee, which had crossed the 73-mark earlier this week.

The Indian currency has gained 123 paise in two sessions on report that PM Narendra Modi would hold a meeting to discuss economic scenario and the deteriorating rupee situation over this weekend.

At 9:57 am, the Sensex rose 205 points to 37,923 level. The Nifty too gained 72.85 points to 11,442 points. Brent crude, which hit $80 per barrel two days ago, was trading at $78.25 a barrel.

Sentiment was bolstered on Wednesday after the government said all steps will be taken to ensure the domestic currency does not depreciate to \"unreasonable levels\", amid reports that Prime Minister Narendra Modi will take stock of the economic situation over the weekend.

The government also issued a statement thatthe rupee would not be allowed to crash to an unreasonable level which further bolsteredsentiments and enabled the rupee to climb back to 72.18 vis-a-vis the US dollarat the end of the day to settle at 51 paise higher than the previous day'sclose.

While the Sensex rose 325 points to hit an intra day high of 37,738, the Nifty recovered 93 points to touch 11,380 level. Top gainers on the Sensex were Adani Ports (2.82%) , Sun Pharma (2.77%) and ITC  (2.59%).

On Tuesday, foreign institutional investors pulled out Rs 1,454 crore from the Indian stock markets-their highest daily outflow in over three months. Brent crude, used to price international oils, gained 57 cents to $79.63 a barrel.

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Indian IT services companies could see improvement in margins by as much as 100 basis points in their second quarter results due to the depreciating rupee.

Economic Affairs Secretary Subhash Chandra Garg said last week's rupee fall was on account of the belief that emerging markets with a current account deficit may face some pressures going forward, and the rupee was no exception

Earlier, the Indian currency opened at a fresh record low of 72.18 to the dollar, down 45 paise compared to Friday's close of 71.73 level. The currency witnessed intense volatility and hit all-time low of 72.64 during morning deals.

While the sharp decline in rupee's value has unnerved importers, it has also brought cheer to many Indians who stand to gain from its slide.

Continuing its losing streak against the US dollar for the seventh consecutive session, the Indian rupee on Thursday breached the 72 mark for the first time.