The BSE Sensex slumped 286 points on Wednesday after the RBI slashed the benchmark lending rate but also lowered the growth estimate for the current financial year, underscoring risks to economic revival amid multiple headwinds.
After swinging 494 points in choppy trade, the 30-share index settled 286.35 points or 0.77 per cent lower at 36,690.50.
The broader NSE Nifty also fell 92.75 points or 0.85 per cent to 10,855.50.
Earlier in the day, the Reserve Bank of India (RBI) cut interest rate by an unusual 35 basis points to a nine-year low of 5.40 per cent in an attempt to boost an economy growing at its slowest pace in nearly five years.
This is the fourth successive rate cut by the central bank.
The RBI also reduced its growth projection for the Indian economy to 6.9 per cent for the current financial year, from 7 per cent forecasted in June, due to a slowdown in demand and investments.
Most rate-sensitive stocks ended on a negative note, with BSE auto, bankex, finance and realty indices cracking up to 2.10 per cent.
M&M was the worst performer in the Sensex pack, tumbling 5.62 per cent, after the company reported a 52.56 per cent decline in consolidated profit after tax to Rs 894.11 crore for the June quarter, hit by lower vehicle sales.
Other laggards included Tata Steel, Tata Motors, SBI, Vedanta, Axis Bank, ITC, RIL, Maruti, L&T, HDFC twins and Kotak Bank, which fell up to 4.75 per cent.
On the other hand, HUL, Yes Bank, Hero MotoCorp, IndusInd Bank, Sun Pharma, Tech Mahindra and Infosys rose up to 1.95 per cent.
"The downward revision in real GDP from 7 per cent to 6.9 per cent is likely to affect the short-term sentiment in the markets. Increasing flows to NBFCs will boost credit availability, which in turn is good news for the MSME sector and exporters of all verticals," said Pushkar Mukewar, co-founder and co-CEO of Drip Capital.
Sectorally, BSE metal, auto, energy, oil and gas, basic materials, realty, bankex, capital goods, finance and telecom indices fell up to 2.67 per cent.
Only healthcare, IT and teck ended in the green, spurting up to 0.51 per cent.
Broader BSE midcap and smallcap indices too fell up to 0.44 per cent.
Globally, the US-China trade tensions dominated sentiments, even as the US softened its trade war rhetoric.
Elsewhere in Asia, Shanghai Composite Index, Kospi and Nikkei ended in the red, while Hang Seng settled a tad higher.
Equities in Europe were trading on a positive note in their respective early sessions.
Meanwhile, the Indian rupee depreciated 2 paise to 70.84 against the US dollar intra-day.
Brent crude futures, the global oil benchmark, slipped 0.54 per cent to USD 58.62 per barrel.