The benchmark Sensex resumed firm on key rate cuts by the apex bank, but failed to maintain the gains and reacted downwards by about 24 points in late morning trade on economic concerns.
The Bombay Stock Exchange 30-share barometer opened higher by 89 points at 8,535.03 points but fell back to quote at 8,422.01 points at 1015 hrs, a fall of 24.48 points or 0.29 per cent from its previous close.
The broader Nifty of the National Stock Exchange also moved down by a mere 3.60 points, or 0.14 per cent, to 2,641.60 at 1015 hours from its last close.
The Reserve Bank of India late on Wednesday evening cut repo and reverse repo rates by 50 basis points each with immediate effect. Repo is the rate at which RBI lends short-term funds to commercial banks, while reverse repo is the rate at which banks park overnight funds with RBI.
The move signaled banks to further soften interest rates to fuel demand in the economy reeling under the impact of the global financial meltdown.
Interest rate related counters from realty and banking attracted good buying support while refinery and power stocks fell on profit-taking.
Asian indices were mixed on Thursday morning despite China's overnight assurance to increase spending on infrastructure and manufacturing.