Market benchmark Sensex fell 218 points to quote at 32,584.66 in late afternoon trade today soon after the Reserve Bank kept the policy rate unchanged at 6 per cent but raised the inflation forecast.
The six-member Monetary Policy Committee (MPC), headed by Reserve Bank of India Governor Urjit Patel, in its bi-monthly monetary policy review kept repo rate unchanged at 6 per cent and reverse repo at 5.75 per cent.
The Sensex, which had lost 100 points in early trade, continued its slide and fell 217.78 points, or 0.66 per cent, to 32,584.66.
The gauge had lost 67.28 points in the previous session.
Similarly, the NSE Nifty was trading lower by 78.70 points, or 0.77 per cent, at 10,039.55.
Interest-sensitive stocks took a beating, dragging the BSE banking index down by 0.49 per cent. SBI, ICICI Bank, Axis Bank, HDFC Bank, Bank of Baroda and Yes Bank fell by up to 1.44 per cent.
Selling pressure also gathered momentum in other stocks such as Sun Pharma, Tata Steel, Hero MotoCorp, Bajaj Auto, M&M, Adani Ports, Wipro, NTPC and L&T.
RBI today kept the policy rate unchanged at 6 per cent on expected lines but raised the inflation forecast for remainder of the current financial year to 4.3-4.7 per cent.
The central bank kept the economic growth forecast unchanged at 6.7 per cent for the fiscal ending March 31.
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