Extending losses for the third straight day, benchmark BSE Sensex on Tuesday slipped by 122 points to close at 29,000.14 as RBI keeping interest rate unchanged disappointed investors.
Interest rate sensitive realty and baking stocks bore the brunt of selling after the Reserve Bank of India left repo rate unchanged at 7.75%, but cut SLR by 0.50% to 21.50%. Markets were expecting the central bank to continue the rate cut cycle after it surprisingly cut rate by 0.25% a fortnight ago.
BSE Bankex plunged by by 2.61%, while realty slumped 1.43%.
The 30-share index was up 130 points higher in early trade ahead of RBI policy announcement but shed the gains to trade below 29,000 level.
It finally settled at at 29,000.14, showing a loss of 122.13 points or 0.42% from its previous close.
The Sensex has lost 681.63 points or 2.30% in the three days.
The NSE Nifty also fell by 40.85 points or 0.46% to finish at 8,756.55.
"Markets showed its disappointment on the outcome of monetary policy by trimming the day's gains," said Hiren Dhakan, associate fund manager, Bonanza Portfolio.
Meanwhile, foreign portfolio investors sold shares worth a net Rs 629.97 crore Monday, as per provisional data from stock exchanges.
Of 30 Sensex stocks,16 ended lower while 14 others finished higher.
Axis Bank 4.95% was the biggest loser. Tata Power lost 4.12%, Bajaj Auto 3.74%, M&M 3.52%, HDFC 2.98%, Cipla 2.52%.
However, SSLT rose by 6.23%, Bharti Airel 3.42%, Reliance Ind 3.25% and ONGC 2.64%.
Among the BSE sectoral indices, healthcare fell by 0.92% and auto 0.66% while FMCG rose by 1.06%, Metal 0.80% and consumer durable 0.50%.
The total market breadth turned negative as 1,531 stock ended in the red, 1,332 closed in the green and 118 ruled steady. Total turnover rose to Rs 4,737.88 crore from Rs 4,201.09 crore on Monday.
In the overseas markets, Asian stocks ended mixed as key indices in China, Hong Kong and Taiwan rose by 0.29% to 2.45% while indices in Japan, South Korea and Singapore moved down by 0.04%-1.27%.
European stocks were trading higher in their early trade by hopes of an agreement on the Greek debt standoff after the country's new government dropped calls for a write-off of its foreign debt and proposed swapping debt for growth-linked bonds. Key indices in France, Germany and UK rose by 1.24%-1.48%.