MUMBAI, June 4 Reuters The Indian rupee slumped on Tuesday after vote counting trends signalled that Prime Minister Narendra Modi39;s Bharatiya Janata Partyled alliance would win a narrower majority than was expected, spurring a selloff in local equities.

The rupee closed at 83.53 against the U.S. dollar, down 0.47 on the day, its worst singleday percentage fall since February last year.

The Reserve Bank of India RBI likely stepped in to limit the rupee39;s decline, traders said. Staterun banks were spotted offering dollars near 83.50 levels, likely on behalf of the RBI.

The sales were intended to plug likely outflows instead of pushing the dollarrupee pair lower, a foreign exchange trader at a large private bank said.

Indian equity indices plunged on worries about the election outcome. The Nifty 50 Index had its worst day in over 4 years and Indian bond yields rose.

Markets reacted negatively due to the smallerthanexpected mandate and PM Modi39;s Bharatiya Janata Party not achieving a majority on its own, Shreya Sodhani, regional economist at Barclays Bank said.

The government is still likely to be stable, but markets will likely take a while to gain confidence in the new government, she added.

Modi was well short of the landslide predicted in exit polls, the Election Commission of India website showed.

The worry for Indian markets was that a slimmer mandate for the Modiled alliance could hamper the undertaking of more economic reforms.

Meanwhile, the dollar…