Indians struggled to pay for basic goods like food and fuel on Wednesday and fretted about their savings, after the government withdrew 500 and 1,000 rupee notes from circulation in a bid to flush out money hidden from the tax man.
The shock measure also sent shudders through the investment community on a day when the markets were also reeling at the election of Republican candidate Donald Trump as the next U.S. president.
India's National Stock Exchange share index slumped as much as 6.3 percent in early trade before recovering most losses to close the day off 1.3 percent.
The currency move, announced late on Tuesday night by Prime Minister Narendra Modi, aims to bring billions of dollars worth of unaccounted wealth into the mainstream economy and curb corruption.
The biggest disruption in decades to cash transactions, which power much of the rural economy, comes months before a series of state elections including in India's most populous Uttar Pradesh state.
Critics have warned that ordinary people who do not have access to the banking system will be hardest hit, and that Modi risks upsetting his ruling party's support base of small traders and businessmen who largely deal in cash.
It will also affect politicians running for office in a country where there is no state financing for elections and many campaigns are funded by unaccounted wealth.