The BSE benchmark Sensex slipped into negative territory for a brief period after the RBI kept key policy rates unchanged today, but re-entered the green zone towards the fag-end of the session.
The central bank kept the interest rate unchanged, as widely expected, but raised concerns over fiscal slippages in view of rush for farm loan waivers.
It has, however, slashed the Statutory Liquidity Ratio (SLR) or the percentage of deposits that banks have to park in government securities, by 0.5 per cent, a move that would result increased lending by banks.
The 30-share Sensex fell over 15 points to 31,175.23 soon after the policy announcement, but later recovered 86.75 points to 31,277.31.
The gauge had started the session on a positive note this morning and recovered over 100 points after the Met department revised upwards its monsoon forecast.
The broader NSE Nifty too dropped 3.55 points, or 0.04 per cent, to 9,633.60, reacting to the RBI policy outcome. It also recouped losses to trade at 9,664.40, up 27.25 points.
Brokers said RBI's decision to keep key interest rate unchanged was largely in line with expectations.
The RBI left the short-term lending rate or repo rate unchanged at 6.25 per cent and the cash reserve ratio static at 4 per cent.
The central bank cut growth projection for the current fiscal to 7.3 per cent from 7.4 per cent.
The RBI also projects inflation in 2-3.5 per cent range for the first half of 2017-18 and 3.5-4.5 per cent for the second half.
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