Sensex plunges 221 points as RBI keeps policy rate unchanged

After trading in the positive territory in early trade, the benchmark BSE Sensex slumped by 221 points after the RBI kept the interest rate unchanged.

The Sensex, which gained 130.79 points in early trade, fell 221.20 points, or 0.75%, to 28,901.07 at 1215 hours after the Reserve Bank maintained its key lending rate at 7.75% in its 6th bi-monthly monetary policy review.

The gauge had lost 559.50 points in the previous two straight sessions.

Similarly, the wide-based National Stock Exchange index Nifty was trading at 8,729.40, down 68.00 points, or 0.77%.

Brokers said the RBI decision to keep key interest rate unchanged was largely in line with investor expectations and even its move to slash SLR by 0.50% to 21.5 to improve liquidity in the financial system did not have any immediate positive impact.

The RBI left the short-term lending rate or repo rate unchanged at 7.75%, and the cash reserve ratio static at 4%. The statutory liquidity ratio (SLR) cut by 50 basis points to 21.5%.

The RBI also retained the growth projection for the current fiscal at 5.5% and 6.5% for 2015-16.