Equity benchmark indices reversed early morning trends and turned red on Friday afternoon after the Reserve Bank of India cut repo rate by 25 basis points to 5.15 per cent but also lowered its GDP growth forecast for the current financial year to 6.1 per cent from 6.9 per cent earlier.
At 1:30 pm, the BSE S&P Sensex was down by 163 points at 37,944 while the Nifty 50 edged lower by 40 points to 11,274.
While the central bank brought the cumulative reduction in interest rate of 135 basis points for this calendar year, investors appeared unsure if it is sufficient to support the flagging consumer demand amid slowing economic output, rising unemployment rate and low business confidence.
Besides, the aggravating non-banking financial company (NBFC) liquidity crisis continues to severely impact the credit availability for industry, especially real estate developers and construction firms.
At the National Stock Exchange, most sectoral indices were in the red except for Nifty auto, IT and pharma. Nifty bank dropped by 2 per cent, media by 1.9 per cent, FMCG by 1.4 per cent and realty by 0.8 per cent.
Among stocks, the prominent losers were Kotak Mahindra Bank and Grasim which slipped by 3 per cent each, Bharat Petroleum Corporation by 2.6 per cent, JSW Steel by 2.2 per cent and UltraTech Cements by 2 per cent.
However, those which showed gains were Cipla, Mahindra & Mahindra and IT majors like Infosys, Tech Mahindra and Tata Consultancy Services.