Britain's monumental and historic decision to move out of the 28-member European Union (EU) had a dramatic and telling impact on the Indian share market on Friday.
The BSE Sensex lost 1034 points to quote at 25,968 and the Nifty shed 328 points to trade at 7,942.
"The government is prepared for all eventualities. As far as the stock markets are concerned, it is an initial reaction, because what is happening is going against their expectations," Economic Affairs Secretary Shaktikanta Das told media here.
"Yesterday, the market probably believed that the exit (by UK) will not happen and today the exit looks a distinct possibility going by current trends," he added.
With the EU referendum indicating that 'leave' votes are slightly more than 'remain', there has been a sharp decline in the rupee, which has further accentuated the market's fall.
Commenting on the market situation Das said this is an instant reaction and that it should stabilise over the next few days.
"The markets hopefully will improve in coming days," he said.
"As far as the currencies are concerned the depreciation of the Indian rupee is happening in line with the other Asian currencies and you know the way pound sterling has also been depreciating, so all the currencies are depreciating," he added.
Das further said that the government, the finance ministry and the Reserve Bank of India have been working on this issue.
"We have discussed all the possible eventualities of the Brexit over the last several weeks and we are prepared to deal with the situation as it is an emergency," he added.
He further said the Union Finance Minister Arun Jaitley is constantly and regularly monitoring the situation.
"The Finance Minister, who is in Beijing, is also constantly and regularly monitoring the situation, we are regularly in touch with him. He is giving required directions at regular intervals," he added.
According to reports, the Indian rupee is headed for the biggest decline since 2013 as the U.K.'s referendum results pointed toward a vote to leave the European Union.
The rupee lost one percent in opening trade on early trends that Britain would leave the EU following a nationwide referendum.
