New Delhi - India's benchmark Sensex index tumbled 4.2 per cent in trading on Tuesday afternoon on heavy selling by funds and investors after the Federal Reserve Bank of India hiked its key interest rate.

The 30-share index lost 606.41 points and was trading at 13,742.70 points at mid-session soon after the RBI announced the hike in a quarterly review of the monetary policy.

Market analysts said weak global markets had a negative impact on trading in the domestic bourses.

The bank raised the key short-term inter-bank lending rate and mandatory cash reserve requirement by 0.50 per cent and 0.25 per cent respectively, a move that could increase interest rates for personal and commercial credit, the PTI news agency reported.

Similarly, the broader S&P CNX Nifty of the National Stock Exchange was also down by 155.9 points to 4,176.20, a loss of 3.60 per cent.

Blue-chip stocks led by Reliance Industries, Oil and Natural Gas Corporation, Infosys Technologies, ICICI Bank and HDFC Bank fell sharply. (dpa)