A surge in crude oil prices and rising US interest rates sent stocks and the rupee tumbling on Tuesday while domestic bond yields-hovered around two-week highs.

Benchmark indices crashed around 1 per cent and the rupee succumbed to a two-week low on Tuesday.

Brent prices have touched a seven-year high with expectations of prices going up further as demand for the fuel shoots up from recovering economies.

Rising US bond yields have turned the mood bearish. Investors fear higher inflation may force the US Federal Reserve to raise interest rates faster than expected.

Back home in India, investors fear the RBI will hike the reverse repo rate next month and follow it up with an increase in the repo rate in April that has led to bond prices falling for over a month.

The yield on the benchmark 10-year bond — interest rates and prices move in opposite directions — settled at 6.62 per cent compared with the previous close of 6.64 per cent.

In the US, the 10-year treasury on Tuesday hit a high of 1.85 per cent in intra-day trades, after which it was trading at around 1.83 per cent. It had previously closed at 1.77 per cent.

For the equity investor, the results season has not shown any major negative surprises. But corporate India will have to face the challenge of rising input costs that may crimp their margins, analysts said.

The 30-share Sensex tanked 554.05 points or 0.90 per cent on Tuesday to end at 60754.86. Only seven stocks ended in the green.

The broader NSE Nifty fell 195.05 points or 1.07 per cent to 18113.05. As many 43 Nifty stocks closed with losses while six advanced.

“A surge in oil prices and FIIs turning net sellers added volatility in the domestic market. Globally, markets witnessed selling pressure following a surge in US treasury yield amid rate hike worries while oil prices rose on supply tension owing to the drone attack on UAE,” Vinod Nair, head of research at Geojit Financial Services, said.

In the forex markets, the rupee fell 33 paise to close at a two-week low of 74.58 against the dollar.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 95.34, up 0.09 per cent.

The rupee opened at 74.36 and fell to an intra-day low of 74.60. It finally settled at 74.58, down 33 paise over its previous close of 74.25.