Benchmark indices slumped for the second day in a row as US Bond yields surged, crude prices continued to rally and the rupee hit a new fresh record low.

Hints that there maybe further interest rate hikes in the US, pushed the US 10-year treasury yield to 3.18 per cent, which was one of the prime reasons for the massive fall in the Indian markets. The rupee also weakened considerably hitting a record low of 73.80 against the US dollar, which further compounded the selling.

The Sensex was last seen trading at 35,205 points, with a drop of 777 points, while the Nifty was seen trading lower by a staggering 242 points. Shares in Federal Bank fell after the bank was fined by the RBI.

Most of the Nifty stocks tumbled in trade, with the IT pack, which had so far been resilient also seeing some massive fall. Auto stocks continued to slide with the likes of Eicher Motors among the top loser from the Nifty. However, heavyweight Reliance was dragging the markets lower with a cut of near 4.75 per cent.

Banking shares slump

Banking stocks were down ahead of the decision by the RBI on interest rates. It is likely that the country's central bank would hike interest rates by 0.25 per cent on Friday. Analysts are now suggesting that there might even be a 0.50 per cent hike in the repo rate, given the way the rupee has tumbled. However, there are also hopes that the RBI may cut the Cash Reserve Ratio to help improve the liquidity situation.

Asian markets lower

The worst impacted from among the Asian markets was the Hang Sang, which lost more than 1.4 per cent, while the Japanese's Nikkei lost its earlier gains to trade down by 0.22 percent in the morning, while Kospi index lower by 1.21 percent, with most sectors still seeing losses.