Erasing initial gains, the Sensex was down by over 84 points after the Reserve Bank left the key interest rate unchanged today to fight inflation and lowered economic growth projection to 6.5% for this fiscal.
RBI also pegged March-end inflation at 7%, up from 6.5% earlier.
The BSE 30-share barometer, which had added 55 points in opening trade, fell by 84.29 points at 17,059.39 at 1217 hrs, triggered by a slide in interest rate sensitive banking, auto realty stocks.
Similarly, the National Stock Exchange index Nifty was down 29.3 points at 5,170.5.
Among the sectoral indices, the BSE bankex was down 1.31% at 11,786.47; auto index was trading down 0.69% at 9,015.83 and realty index lost 0.73% to 1,606.88.
As a liquidity inducing-measure, however, RBI brought down the Statutory Liquidity Ratio (SLR), the amount of deposits banks park in government bonds, by per cent to 23%, effective August 11.
The key lending (repo) rate, at which banks borrow from RBI, has been retained at 8%. The Cash Reserve Ratio, which is the amount of deposits parked by banks with RBI, has been kept at 4.75%.