Broadly negative global cues, as well as disappointment over the Reserve Bank's monetary policy announcement, dragged the key Indian equity indices to end in the red for the second straight day on Wednesday.
According to market observers, caution over initial signs on re-emergence of trade tension between the US and China subdued the Asian markets and subsequently impacted the domestic indices.
Even the disappointment over the Reserve Bank of India's (RBI) decision to maintain its stance of "calibrated tightening" unchanged had its impact on the investor sentiments.
In addition, the RBI's monetary policy committee (MPC) kept its key lending rate for commercial banks unchanged at 6.5 per cent for the second time in succession.
"The pace of our OMOs has stepped up with the injection of slightly over Rs 1 trillion in the last three months. Second, the RBI has also provided a liberal infusion of liquidity through term repos in addition to the usual provision via the LAF...," RBI Deputy Governor Viral V. Acharya said at the post-MPC meeting press conference.
"Based on our assessment of durable liquidity needs going forward, we have already announced an OMO purchase program of Rs 40,000 crore for December. We expect that this increased frequency and quantum of OMO purchases may be required until the end of March."
Index-wise, the S&P BSE Sensex lost close to 250 points, while the NSE Nifty50 settled at 10,784.95 points.
However, the Nifty IT index saw a recovery as it was the only sectoral index ending in green with marginal gains.
The Sensex settled lower 0.69 per cent, or 249.90 points, at 35,884.41, from its previous close of 36,134.31. It touched an intra-day high of 36,048.65 and a low of 35,777.81.
The Nifty50 lost 84.55 points or 0.74 per cent to close the session at 10,784.95.
"RBI has adopted a cautious approach and held on to rates. Reducing SLR requirement from next quarter onwards is a welcome move," said Rajesh Sharma, MD, Capri Global Capital.
"Some more measures like reducing risk weight specifically for NBFC lending to MSME sector to boost confidence in NBFCs would have triggered positive sentiment in the sector."
(With inputs from agencies.)