The benchmark BSE Sensex cracked over 300 points and the NSE Nifty dropped below the 12,000 level in afternoon session Thursday tracking losses in financial stocks after the Reserve Bank cut its key interest rates for the third time in a row.
The 30-share index was trading 333.32 points, or 0.83 per cent, lower at 39,750.22, and the broader Nifty fell 114.35 points, or 0.95 per cent, to 11,907.30.
Top losers in the Sensex pack include IndusInd Bank, Yes Bank, Vedanta, SBI, L&T, M&M, Tata Steel, RIL, TCS, ICICI Bank and HDFC twins, shedding up to 5 per cent.
On the other hand, Asian Paints, Coal India, HUL, PowerGrid, HCL Tech and Infosys were trading up to 2 per cent higher.
According to traders, investor sentiment took a hit after the RBI lowered its benchmark lending rate to nearly a nine-year low of 5.75 per cent.
Slashing benchmark lending rates for the third time this year, the RBI cut its repo rate by 0.25 per cent Thursday and said its future monetary policy stance will be more accommodative.
The central bank also lowered the economic growth forecast for the current fiscal to 7 per cent due to slowdown in domestic activities and escalation in global trade war.
"RBI reduced repo rate by 25 bps as expected. The change in stance to ‘accommodative’ was a bit of a surprise. Debt markets will take this as a significant positive move though most of the rate cut cycle is probably over," said Suvodeep Rakshit, Sr. Economist, Kotak Institutional Equities.
"The tone of the RBI policy was dovish and highlights the concerns on growth. We maintain our call for another 25 bps rate cut in August factoring in the benign inflation trajectory and the growing concerns on growth," Rakshit added.
On the currency front, the rupee was trading 4 paise lower at 69.30 against the US dollar.