The surge in stock markets after Reserve Bank cut key policy rates was short-lived as the benchmark Sensex lost over 80 points.
The 30-share Bombay Stock Exchange index, closed at 10,898.11 points, down by 81.35 points over the previous close.
"The market was divided on the possibility of a rate-cut. The 25 bps cut in key short-term rates by RBI in its annual policy for financial year 2009-10 came as a surprise to the market but the impact is going to be short-lived," Ashika Stock Brokers Research Head Paras Bothra said.
However, the index pared its early losses after the rate cut announcement and surged by over 80 points in afternoon trade. The Sensex had opened lower by nearly 215 points.
The surge was pursuant to the emergence of fresh buying by funds and retail investors after the Reserve Bank cut short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points each, Bothra said.
Analysts said that though buying activity re-emerged after the RBI move, the rate cut has been factored in by the market and from tomorrow it would look to global cues for direction.