Indian bonds and the rupee fell sharply in early trade on Thursday, while stocks also retreated, after Saudi Arabia launched air strikes in Yemen, sending global crude prices surging.
India imports nearly two-thirds of its oil requirement and a rise in oil prices could be detrimental to not only the import bill but also inflation.
The Indian rupee touched 62.6350 to the dollar, its lowest since March 19, while the 10-year government bond yield rose to 7.79 per cent, highest since March 18.
The rupee closed at 62.3250/3350 and 10-year bond ended at 7.77 per cent on Wednesday.
Indian shares fell more than 0.5 percent, led by declines in blue chips. The NSE index has lost 4.8 per cent so far this month, heading towards its steepest monthly decline since Feb. 2013.
Saudi Arabia launched air strikes in Yemen on Thursday in coalition with Gulf region allies to counter Iran-backed forces besieging the southern city of Aden, where the U.S.-supported Yemeni President had taken refuge. This pushed up Brent crude prices by nearly 6 per cent on Thursday.