Key equity benchmarks reversed all the gains and fell sharply in the last hour trade as the Reserve Bank of India (RBI) surprised the market by maintaining status quo in policy rates on Wednesday.
While the 30-share index Sensex lost 0.59 percent to close at 26,236.87, the 50-share index Nifty ended the trade at 8,102.05, down 0.5 percent.
Shares of Sun Pharma tanked 5.97 percent to close at Rs 664 as US drug regulator issued observations after inspecting company's Halol plant. Banking shares also fell with Bank of Baroda and Axis Bank witnessing selling pressure on Wednesday.
However, shares of Eicher Motors, HDFC, BPCL and Adani Ports bucked the trend and closed in the green. Market breadth turned negative with sharp fall in rate sensitive sectors post RBI's decision not to cut policy rates. Slashing of GDP growth rate forecast by RBI also weighed on investors' sentiments.
However, the central bank's decision to remove the incremental cash reserve for banks from December 10 provided some support to the market. After RBI's decision not to change key policy rates, analysts were of the view that market would wait for upcoming Federal Reserve policy meeting scheduled on December 13-14 for future direction. Meanwhile, Indian currency appreciated 0.40 percent to close Wednesday trade at 67.93 against dollar.
