Equity benchmark Sensex plunged over 1,700 points from the day's high on Friday after RBI Governor Shaktikanta Das said the projected annual GDP growth was at risk due to the COVID-19 outbreak as he unveiled a slew of measures to support the economy during the crisis.
The Reserve Bank of India (RBI) announced its steepest interest rate cuts in more than 11 years, slashing the repo to 4.4 per cent - the lowest in at least 15 years.
Further, it reduced the cash reserve ratio (CRR) for all banks by 100 basis points to release Rs 1.37 lakh crore across banking system. It also put on hold monthly instalment payments on all term loans for three months.
After opening significantly higher, the 30-share BSE barometer gave up all gains to trade 407.58 points or 1.36 per cent lower at 29,539.19 at 1130 hours. It hit a high of 31,126.03 and a low of 29,360.69.
Similarly, the NSE Nifty gave up the 9,000 level and tumbled 71.55 points, or 0.83 per cent, to 8,569.90.
Bharti Airtel was the biggest loser in the Sensex pack, tanking up to 6 per cent, followed by HCL Tech, Hero MotoCorp, Maruti, Asian Paints and Bajaj Auto.
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On the other hand, Axis Bank SBI, IndusInd Bank, NTPC, ICICI Bank and PowerGrid were among the top gainers.
Despite massive rate cuts, domestic market turned negative on concerns over the annual economic growth, traders said.
Announcing the decisions of the Monetary Policy Committee (MPC), RBI Governor Das said that no projection for growth and inflation was being given in view of the uncertainty created by outbreak of the deadly virus.
He further said that the growth projection of 4.7 per cent for the fourth quarter of 2019-20 and 5 per cent for the whole fiscal was at risk.
Analysts, meanwhile, hailed the measures taken the central bank.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial, said: A massive bazooka from the RBI in "mission mode". It's a relief cum stimulus package with a big repo cut and even bigger reverse repo cut. This together with CRR cut will be a big stimulus for banks to lend.
The relief given on the repayments in term loans is a very timely action and would serve to remove lot of stress which a large number of borrowers may face in the coming days, said Joseph Thomas, Head of Research - Emkay Wealth Management.
This is a direct and targeted approach to the fluid situation in the face of an uncertain inflation and growth trajectory, he noted.
Meanwhile, the Indian rupee appreciated by 81 paise to 74.35 against the US dollar in intra-day trade.
The number of deaths around the world linked to the new coronavirus has crossed over 24,000. In India, around 700 Covid-19 cases have been reported so far.
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