Nifty falls up to 1.6 percent after RBI policy

MUMBAI (Reuters) - The Nifty fell as much as 1.6 percent on Tuesday, led by losses in lenders after the central bank did not offer clarity at its policy review on further easing to spur growth.

The Reserve Bank of India, which cut its policy interest rate by a quarter percentage point in its third policy easing this year, said the more appropriate stance is to "front-load a rate cut today" and wait for data to clarify uncertainty.

The central bank warned it would closely track inflationary trends, citing risks posed to food prices if monsoon rains are weaker than expected, or global crude prices recover, or the rupee weakens due to volatility in global markets.

"The 25 bps cut was already priced in. The market is disappointed with the central bank's subdued outlook for inflation and GDP growth," said Gaurang Shah, vice-president, Geojit BNP Paribas.

Sentiment was also hurt by lack of any fresh measures to free up cash-strapped commercial banks' liquidity, which bankers had said were needed for them to lower lending rates further and pass on the benefits of monetary easing to the broader economy.

The Bank Nifty was down 2.1 percent, underperforming the Nifty.

The Sensex and the Nifty was down 1.5 percent and 1.6 percent, respectively.

(Reporting by Himank Sharma; Editing by Subhranshu Sahu)