RBI credit policy impact: Sensex snaps 2-day gains, drops 156 points

The BSE benchmark Sensex snapped two straight sessions of gains to close lower on Wednesday after the RBI unexpectedly kept its repo rate unchanged.

The Nifty fell as much as 0.81 percent, before ending 41.10 points or 0.50 percent lower at 8,102.05. The Sensex closed down 155.89 points or 0.59 percent at 26,236.87.

Urjit Patel-led 6-member Monetary Policy Committee, which had in its first policy review cut interest rate by 0.25 percent in October, belied expectations to keep benchmark repo rate unchanged at 6.25 percent unanimously.

Financials were among the biggest losers, before recovering some lost ground after the RBI said it would withdraw the temporary 100 percent hike in the cash reserve ratio announced late last month. RBI had last week asked banks to maintain 100% of the deposits (NDTL) accrued between September 16 and November 11 as incremental CRR balance with it.

In view of disruption in economic activities due to demonetisation, RBI also lowered growth forecast from 7.6 per cent to 7.1 percent for the current fiscal.