The six-member Monetary Policy Committee (MPC), headed by Reserve Bank of India Governor Urjit Patel, kept the policy rate unchanged on expected lines but raised the inflation forecast for remainder of the current fiscal to 4.3-4.7 per cent.
The 30-share index declined by 205.26 points, or 0.63 per cent, to 32,597.18 after hitting a low of 32,565.16 soon after the central bank announced its policy rate.
The wider Nifty hit a low of 10,033.35 before finishing at 10,044.10, down 74.15 points or 0.73 per cent. It had touched a high of 10,104.20 in early trade.
The central bank kept the economic growth forecast unchanged at 6.7 per cent for the fiscal ending March 31.
Interest rate-sensitive stocks took a beating, dragging the BSE banking index down by 1.23 per cent. SBI, ICICI Bank, Axis Bank, HDFC Bank, Bank of Baroda, Punjab National Bank and Yes Bank fell by up to 2.27 per cent.
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