The worst GDP performance in nine years, rather brought a silver lining for the BSE Sensex which pared early losses and closed the day lower by 94 points at 16,218.53.
Investors drew solace from expectations that the poor economic data will put pressure on the Reserve Bank to cut interest rates. Besides, finance minister Pranab Mukherjee's comments that the government will take necessary steps to improve growth also helped sentiments.
As European stock markets were in the green, contrary to Asian stocks in the morning, investors took a positive view about the Indian stocks as well.
In the process, the Sensex which was down by 226 points at one time recovered most of the losses by closing of trade.
In tandem, the rupee, which had slipped further to touch a record low of 56.50 to a dollar in early trade, also staged a comeback and was last trading at 56.10-56.15 levels as compared to 56.24 yesterday.
Hit by global woes and domestic problems, the economic growth rate slowed to a nine-year low, both in the March quarter at 5.3% as well as in 2011-12 at 6.5%.
Selling in stocks was led by auto, bank, consumer durables and capital goods with losses up to 1-2% while buying in realty, IT and Teck sectors cushioned against any major fall.
"...will RBI now shift to a greater emphasis on growth? We certainly believe it should, given the fact that economic growth leads inflation and is running well below everybody’s estimate of trend," said Robert Prior-Wandesforde, economist, Credit Suisse.
On similar lines, the broad-based National Stock Exchange index Nifty closed lower by 26.50 points, or 0.54% at 4,924.25, after touching the day's low of 4,883.55.