Investor wealth plummeted by over Rs 6.27 trillion and yields on the benchmark 10-year bond rose to a three year high as the markets were bulldozed by the unexpected 40 basis points hike in the repo rate by the Reserve Bank of India (RBI).

The sudden RBI announcement took the wind out of sail for the already choppy equities and it sent the benchmark Sensex crashing by 1306.96 points points or 2.29 per cent at close. During intra-day trades it tanked 1474.29 points to 55,501.60. This was its third straight session of loss. On similar lines, the broader NSE Nifty tanked 391.50 points or 2.29 per cent to finish at 16,677.60.

In the bond markets, government security prices felt the heat and yields on the benchmark 10-year bond rose to hit a three year high of 7.41 per cent during intra-day trades. It closed at 7.38 per cent, up almost 26 basis points from the previous finish of 7.12 per cent.

Stock market circles said that equities are likely to remain under pressure with the Indian central bank expected to raise interest rates further in June and the US Federal Reserve also taking an aggressive stand to fight inflation. This comes at a time when results of corporate India has not been exciting and foreign portfolio investors have been consistent sellers.

Interest rate sensitive stocks suffered the most with auto, real estate and banking stocks witnessing heavy selling pressure. Bajaj Finance was the biggest loser in the Sensex pack, tumbling 4.29 per cent. it was followed by Bajaj Finserv, Titan, IndusInd Bank, HDFC Bank, Maruti and RIL.

Only three shares managed to finish higher and these included PowerGrid, NTPC and Kotak Mahindra Bank, which rose up to 2.75 per cent.

Coming ahead of the US Fed announcement due today, the RBI has taken the lead.