Safe-haven assets such as yen rose, oil prices fell and USA stock futures slid as investors remained wary of the brewing trade war between the two countries. Nifty closed at 10,128, down by 117 points, and BSE Sensex slumped 352 points to close at 33,019.
Brokers said the RBI's decision to keep repo rate unchanged at 6 per cent was largely in line with market expectations and bolstered trading sentiments. Intra-day, it shuttled between 10,290.85 and 10,350.45.
"Market was range bound as investors are still nervous about global trade tensions while better domestic triggers are providing support".
Bank Nifty too rose 2.61% or 630 points to 24,759 level.
"Focus has shifted to earnings growth which is at an early stage of revival". The day's trade was helped by a late buying spell in Pharma, Energy and Banking stocks amid falling global cues. In the broader markets, the mid-cap and small-cap indices ended with gains of 0.65 per cent and 0.61 per cent, respectively.
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The 30 share index lost 93.55 points (0.27 percent) to 33503.25.
Major laggards were Infosys, Tata Motor, SBI, L&T, SBI, Tata Steel, TCS, Hindustan Unilever, M&M, Wipro, Kotak Bank, Hero Motocorp and Maruti Suzuki fall by 1.07percent. Still, the RBI feels that the risks are tilted to the upside given uncertainty around MSP hikes, fiscal slippage and crude oil prices.
In the Asian region, Japan's Nikkei ended 0.36 per cent down, while Hong Kong's Hang Seng rose 1.11 per cent.
Sectoral indices led by metal, IT, auto, teck, and capital were all in red and trading losses up to 1.06 percent.
The German DAX soared 2.9 percent, France's CAC 40 index surged 2.6 percent and the U.K.'s FTSE 100 climbed 2.4 percent.