A benchmark index of Indian equities markets Tuesday closed down 204.97 points as banks, capital goods, auto, consumer durables and metal stocks were hit following the Reserve Bank of India's decision not to change lending rates.
However, the RBI cut the cash reserve ratio (CRR) in its second quarter review of monetary policy.
The CRR, or the money against deposits which commercial banks have to retain in the form of liquid assets such as cash, was cut by 25 basis points to release some Rs.175 billion into the system for commercial lending.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 18,642.01 points, closed at 18,430.85 points, 204.97 points or 1.10 percent down from its previous day's close at 18,635.82 points.
The Sensex touched a high of 18,718.28 points and a low of 18,393.42 in intra-day trade.
BSE midcap index was down by 66.13 points, while the smallcap index was lower by 88.88 points.
On the sectoral front, the BSE bank index was down by 310.00 points followed by capital goods index down by 232.27 points, consumer durables index down by 159.19 points, metals index down 154.90 points, auto index down by 141.47 points, and public sector undertakings (PSU) index down 123.57 points.
The major Sensex losers included State Bank of India (SBI), down 4.43 percent at Rs.2,074.15; Tata Motors, down 3.52 percent at Rs.247.70; Larsen and Toubro (L&T), down 2.93 percent at Rs.1637.90; Hindalco Inds, down 2.38 percent at Rs.110.90; and Jindal Steel, down 2.25 percent at Rs.379.35.
Main Sensex gainers were Maruti Suzuki, up 2.27 percent at Rs.1,394.55; Dr Reddy's Lab, up 1.58 percent at Rs.1,723.00; Infosys, up 0.99 percent at Rs.2,357.35; Hindustan Unilever, up 0.80 percent at Rs.550.45; and Wipro, up 0.78 percent at Rs.347.45.
The wider 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE) was also lower by 67.70 points, or 1.19 percent, at 5,597.90 points.
Among other Asian markets, the trend remained flat -- Japan's Nikkei was down by 0.98 percent, while Hong Kong's Hang Seng was trading 0.38 percent lower. However, Shanghai's Composite Index was up by 0.17 percent.
European markets were up. London's FTSE 100, was trading up 0.77 percent. The German DAX index was higher by 0.95 percent and France's CAC 40, up 1.02 percent.