A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India Photograph:( Reuters )
The RBI left its key repo rate unchanged at 5.15 per cent, and said it would continue with an accommodative stance after its policy meeting
Indian shares pared early gains to end lower on Thursday after the Reserve Bank of India (RBI) kept its policy rate unchanged, surprising investors who were expecting at least a 25 basis-point cut.
The NSE Nifty 50 index closed down 0.21 per cent to 12,018.40 and the S&P BSE Sensex ended 0.17 per cent lower at 40779.59.
The RBI left its key repo rate unchanged at 5.15 per cent, and said it would continue with an accommodative stance after its policy meeting.
Economists polled by Reuters expected the central bank to cut rates for the sixth time this year.
"While the decision to pause is not entirely unjustified given the clear lack of efficacy of monetary policy actions through the policy rate cut channel, what is worrying is that the RBI did not announce any unconventional measure but hoped for better transmission of its past actions," said Kunal Kundu, an economist with Societe Generale in Bengaluru.
Expectations of a rate cut were fueled after India's economic growth slowed to 4.5 per cent in the July-September period, its weakest pace since 2013, piling pressure on Prime Minister Narendra Modi to speed up reforms.
The Nifty had risen 7.7 per cent and the Sensex has gained 8.43 per cent since the last rate cut in October, mainly due to measures such as reducing the corporate tax rate and hopes of more stimulus.
Among the sectors, the Nifty metals index fell most, shedding 2.31 per cent, while the state-owned bank's index was down 1.8 per cent at close.
Zee Entertainment closed up 6.18 per cent to top the Nifty gainers, while JSW Steel was the biggest laggard, shedding 3.52 per cent.