Stock Market: Sensex Falls 308 Points, Nifty Below 19,550 Post-RBI Policy. FMCG, PSU Bank Top Drag

Stock update: On the 30-share Sensex platform, Asian Paints slipped 3 per cent. Kotak Bank, ITC, Bharti Airtel, Axis Bank, ICICI Bank, and Nestle were the other main losers

The two key benchmarks Sensex and Nifty, closed in the negative zone on Thursday following the Reserve Bank of India (RBI) MPC kept the policy repo rate unchanged at 6.5 per cent, extending its pause into third straight policy. The central bank directed banks to maintain incremental cash reserve ratio (ICRR) at 10 per cent, August 12 onwards, in order to reduce liquidity from the system.

The S&P BSE Sensex plunged 308 points lower at 65,688. On the other hand, the NSE Nifty50 touched a low of 19,495, and finally closed with a loss of 89 points at 19,543.

On the 30-share Sensex platform, Asian Paints slipped 3 per cent. Kotak Bank, ITC, Bharti Airtel, Axis Bank, ICICI Bank, and Nestle were the other main losers. On the flipside, IndusInd Bank, JSW Steel, Titan, PowerGrid, M&M, TechM were among the gainers. Shares of Zee Entertainment hit the 20 per cent upper circuit at Rs 290.50 on the BSE after the NCLT approved Zee-Sony India merger. Analysts expect the stock to get re-rated.

In the broader market, the BSE Midcap and Smallcap indices ended with marginal losses of up to 0.2 per cent.

The overall breadth was marginally negative, with over 1,900 shares declining as against 1,686 advancing stocks on the BSE.

Sectorally, except metal and power, all other sectoral indices ended in the red with FMCG and PSU Bank down nearly 1 per cent each, while capital goods, healthcare down 0.5 per cent each.

"Inflation concerns have resurfaced in the domestic market after the RBI elevated their CPI forecast by 30 basis points to 5.4 per cent, thereby increasing the chances of a protracted rate cut trajectory. Furthermore, the RBI's move to control liquidity through incremental CRR dented the sentiments of the banking sector, although the impact is projected to be limited. Against this backdrop, investors will be closely watching the US inflation print today and the domestic inflation data on Monday," said Vinod Nair, Head of Research at Geojit Financial Services.

In Asian markets, Tokyo, Shanghai, and Hong Kong settled in the green, while Seoul ended lower. European markets were trading in the green. The US markets ended in the negative territory on Wednesday.

Foreign Institutional Investors (FIIs) turned buyers on Wednesday after continuous offloading of equities for the past several days. They bought equities worth Rs 644.11 crore on Wednesday, according to exchange data.

Global oil benchmark Brent crude climbed 0.05 per cent to $87.59 a barrel.

Meanwhile, the rupee gained 17 paise to close at 82.68 (provisional) against the US dollar on Thursday after the Reserve Bank left its key interest rates unchanged. Forex traders said rupee appreciated tracking a weak tone in the US dollar. However, weak domestic markets and a surge in crude oil prices capped sharp gains.

At the interbank foreign exchange market, the local unit opened at 82.81 against the US dollar and moved in a range of 82.68 to 82.86 in the day trade. The rupee finally settled 17 paise higher at 82.68 (provisional) against the previous close of 82.85 on Wednesday.