The S&P BSE Sensex and NSE Nifty 50 indexes erased gains paced by losses in banking and financial services shares after the Reserve Bank of India reduced repo rate by 25 basis points. Analysts said that the dip in equities came after the central bank dashed hopes of some market participants who were expecting of repo rate reduction of 35-50 basis points in a bid to revive the flagging economy. HDFC Bank, Kotak Mahindra Bank, ICICI Bank and ITC were among the biggest drags on the Sensex.
As of 1:42 pm, the Sensex traded 331 points or 0.87 per cent lower at 37,776 and the Nifty was down 86 points or 0.76 per cent at 11,228.
Eight of 11 sector gauges compiled by National stock Exchange were trading lower led by the Nifty Bank index's over 2 per cent fall. Nifty Private Bank, Nifty PSU Bank, Nifty Media, Nifty FMCG and Nifty Financial Services indexes also fell between 1.3-1.95 per cent each.
On the other hand, Nifty IT index was top gainer, up 0.68 per cent.
Mid- and small-cap shares were also witnessing selling pressure as the Nifty Midcap 100 and Nifty Smallcap 100 indexes dropped over 0.5 per cent each.
Kotak Mahindra Bank was top loser in the Nifty 50 basket of shares, the stock fell 3.3 per cent to Rs 1,562. Grasim Industries, UltraTech Cement, Titan, Bharat petroleum, HDFC Bank, Bharti Airtel, Nestle India and ICICI Bank also dropped over 2 per cent each.
On the flipside, Cipla, Mahindra & Mahindra, Tech Mahindra, ONGC, Hero MotoCorp, Infosys and IndusInd Bank were among the notable gainers.
The overall market breadth was negative as 1,017 shares were falling while 701 were advancing on the NSE.