The S&P BSE Sensex and NSE Nifty 50 Indexes extended declines even after the Reserve Bank of India cut its key interest rate or repo rate by 25 basis points and changed policy stance to "Accommodative" from "Neutral". The Sensex fell as much as 487 points to 39,596 and the NSE Nifty 50 Index dropped as much as 146 points to intraday low of 11,875. The sudden fall in the equity markets was attributed to lower quantum of rate cut as some analysts were expecting 50 basis points rate cut and clarity on liquidity situation at non-banking finance companies, market participants said.

As of 1:47 pm, the Sensex traded 1.13 per cent or 453 points lower at 39,634 and the NSE Nifty 50 Index declined 1.24 per cent or 149 points to 11,873.

Top laggards on the 50-scrip benchmark index at the time were GAIL, Indiabulls Housing Finance, Induslnd Bank, Larsen & Toubro and Yes Bank, trading between 2.85 per cent and 9.49 per cent lower.

Nine of 11 sector gauges were trading lower led by the Nifty PSU Bank Index's 3.4 per cent decline. Rate sensitive Nifty Bank, Nifty Financial Services, Media, metal, Pharma, and Private Bank Indexes also declined by over 1 per cent each.

In the debt market, the 10-year benchmark government bond yield fell to 6.8798 per cent after the central bank's decision, compared with Tuesday's close of 7.0223 per cent. The rupee, which had weakened to 69.36 against the dollar ahead of the RBI decision, strengthened to 69.2875. This was still weaker than the previous close of 69.265, according to news agency Reuters.