Indian markets fell on Tuesday amid concerns over increased tensions after Pakistan said Indian military jets crossed the Line of Control frontier in the disputed Kashmir region early in the day.
The fell to 71.27 to the dollar compared with Monday's close of 70.9850. Indian bonds opened slightly late after a technical glitch on the trading and clearing platform early morning. The 10-year benchmark bond yield rose to 7.61 percent compared with 7.58 percent on Monday.
The broader NSE stock index declined 0.7 percent.
"People don't want to run position during such uncertain times," said a dealer at a foreign bank.
"Had this strike not been there, bond yields would have been lower as crude is down."
In one of the earliest comments from the Indian government, minister of state for agriculture Gajendra Singh Shekhawat said Indian air force jets carried out air strikes on militant camps inside Pakistan on Tuesday.
"Air Force carried out aerial strike early morning today at terror camps across the LoC (Line of Control) and Completely destroyed it," Shekhawat said on Twitter.
Pakistan's military said Indian military aircraft had crossed into its territory in the disputed Kashmir region and "released a payload" after Pakistan scrambled its own jets, but there were no casualties or damage.
— CNBC contributed to this report.