The benchmark BSE Sensex closed 0.69 percent weaker at 35,884.41, while the broader Nifty ended 0.8 percent lower at 10,782.9.
The Reserve Bank of India (RBI) kept interest rates unchanged, in a decision that was widely expected as inflation has eased significantly, while it took steps to persuade banks to lend more in order to support an economy that has lost some momentum.
Shares of Sun Pharmaceutical Industries Ltd closed lower for a third straight session in the wake of reports of a regulatory probe into the company. The stock ended 6.8 percent lower at its worst closing since April 2013.
(Reporting by Chris Thomas in Bengaluru, Editing by Sherry Jacob-Phillips)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)