MUMBAI (Reuters) - The BSE Sensex and Nifty fell more than 1 percent on Tuesday, on track to snap their four-session winning streak, with financial and IT stocks leading the decline as investors turned cautious after the central bank left key rates unchanged.
The Reserve Bank of India (RBI) kept its policy rate on hold at 7.25 percent, as widely expected, while leaving the door open to ease further depending on the inflation outlook and how swiftly banks lower their lending rates.
The central bank said government economic reforms and the timing of any increase in U.S. interest rates would be key factors that will determine whether it cuts rates for a fourth time this year.
"According to me, they are going too cautiously. The RBI is driven by data and not other factors, which suggest that the economy could possibly go into the fast track if they bring down the rate of interest," said Deven Choksey, managing director, KR Choksey Securities.
Most traders said there is scope for at least another 25 basis point cut in the 2015 calendar year, with the trajectory of oil prices, progress of the monsoon and any interest rate hike by the U.S. Fed acting as triggers.
The Sensex was down 1.12 percent and the Nifty was lower 1.07 percent, heading for their biggest single-day percentage loss since July 27.
Financial stocks such as Housing Development Finance Corp
Housing Development Finance Corp
Oil refiners declined after global prices plunged on Monday as worries of oversupply and a weakening economic outlook, especially in Asia, prompted analysts to warn of further falls.
Reliance Industries
Blue chips like ITC
(Reporting by Karen Rebelo; Editing by Subhranshu Sahu)
