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Markets extended losses after the RBI kept the repo rate and cash reserve ration unchanged but recovered sharply later.
The RBI has kept the repo rate unchanged at 8% and the Cash Reserve Ratio at 4%.
At 11:04AM, the 30-share Sensex was down 95 points at 28,465 and the 50-share Nifty was down 30 points at 8,526.
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(Updated at 10:20AM)
Benchmark indices have extended losses weighed down by selling pressure among rate-sensitive shares ahead of RBI policy meet and IT major Infosys.
By 10:20AM, the 30-share Sensex was lower by 105 points at 28,455 mark and the Nifty slipped by 33 points at 8,523 levels.
The Reserve Bank of India is expected to keep interest rates unchanged today, staying focused on containing inflation, while adopting a more dovish tone in response to the government's call for help to revive economic growth.
Meanwhile, National accounts reveal inflation rates across sectors are close to post-global financial crisis lows, Nomura says.
The rupee is trading at 62.01 near Monday's 62.02/03 close. Sentiment cautious ahead of RBI policy review announcement.
Asian equities are mixed on Tuesday, with a rebound in crude oil and other commodity prices favouring the stock markets of resource-exporting countries, while the likes of Tokyo's Nikkei struggled.
Crude oil held on to its gains after rebounding sharply overnight from five-year lows. The bounce in commodities was also a good omen for commodity currencies such as the Canadian and Australian dollars, and also helped gold to bounce back.
Back home, interest rate sensitive sectors like banks, realty and auto stocks are under pressure ahead of RBI's policy meet today.
BSE Bankex, Auto and Realty indices have plunged between 0.4-1%. Sectors like Consumer Durables and IT are also reeling under selling pressure.
The main losers on the Sensex are Infosys, M&M, Bajaj Auto, Coal India, Tata Motors, Dr Reddy’s Labs, SBI and ICICI Bank.
Infosys turns ex-bonus today for 1:1 bonus issue. The stock is the top Sensex loser, down by almost 2%. The company has fixed December 3, 2014 as the record date for the purpose of allotment of bonus shares. However, the stock turned ex-bonus today.
Bajaj Auto has slumped by almost 1.5%. The company’s total sales in November 2014 declined to 309,259 units compared to 310,591 units in the same month last year.
M&M has slipped by 1% after reporting a 13% decline in total car sales numbers in November, 2014 compared to same month last year.
ICICI Bank is down by nearly 1% as the stock turns ex-stock split on December, 4. Shareholders would be entitled to receive 5 equity shares of nominal value of Rs. 2 each in lieu of 1 equity share of nominal value of Rs. 10 each of the Bank.
On the gaining side, NTPC, Sesa Sterlite, Tata Power, ONGC, BHEL and Bharti Airtel have gained by 1% each.
Among other shares, IRB Infrastructure Developers were up nearly 2% at Rs 275 after the company said it has received provisional certificate by the Competent Authority effective November 27, 2014.
Shares of Sun Pharma Advanced Research Company (SPARC) has surged nearly 13% to Rs 205 on BSE after the company announced that the U.S. Food and Drug Administration (FDA) has issued a complete response letter to its New Drug Application (NDA) for Latanoprost BAK-free eyedrops.
Shares of airline companies such as Jet Airways and SpiceJet were down 4-7% amid profit taking at higher levels after recent gains post decline in global crude oil prices.
