Sensex down 186 points as RBI holds policy rate

Mumbai: Market benchmark Sensex fell by over 186 points on heightened selling pressure soon after the Reserve Bank in a surprise move kept the policy rate unchanged at 6.25 per cent.

The Sensex, which made a higher opening, slumped 186.08 points, or 0.65 per cent, to 28,149.08 soon after the central bank maintained the key lending rate at 6.25 per cent in its 6th bi-monthly monetary policy review today.

The gauge had lost 104.12 points in the previous session. Similarly, the NSE index Nifty was trading lower by 53.30 points, or 0.60 per cent, at 8,715.

Interest-sensitive stocks took a hammering, dragging the BSE banking index down by 0.60 per cent. ICICI Bank, Axis Bank, HDFC Bank, SBI, Kotak Bank, Bank of Baroda, Yes Bank and Federal Bank all fell by up to 1.71 per cent.

Traders said RBI's unexpected decision to hold rates and lower GDP growth forecast for this fiscal to 6.9 per cent triggered across-the-board selling, pulling down the key indices sharply.

Accordingly, the reverse repo rate -- at which RBI absorbs excess liquidity -- is also retained at 5.75 per cent. For the second time in a row, the Reserve Bank today opted for status quo in its key rates, but shifted the stance to 'neutral' from 'accommodative'.