Additionally a massive outflow of foreign funds high crude oil prices and fears over fiscal slippage led the indices downward trajectory.
Index-wise the Nifty50 of the National Stock Exchange closed at 10 316.45 points down 282.80 points or 2.67 per cent from its previous close.
On a similar note the S&P BSE Sensex ended the day s trade deep in the red. It opened at 35 097.99 points and closed at 34 376.99 points down 792.17 points or 2.25 per cent from its previous close.
It touched an intra-day high of 35 118.54 points and a low of 34 202.22 points.
Lately a weak rupee and high crude oil prices have plunged the Sensex by over 2 000 points in only three previous trading sessions while the Nifty50 has shed over 650 points.
In the broader markets the S&P BSE Mid-cap index declined 2.70 per cent while the S&P BSE Small-cap index slipped 2.02 per cent from their previous close.
"Status quo policy was quite surprising while under shooting inflation and recent fuel tax cut may give some leeway to the cautious sentiment " said Vinod Nair Head of Research Geojit Financial Services.
"However rupee weakened further and market dived to lower lows as risk of fiscal deficit and rise in US bond yield still impacting the outflow of foreign money."
According to Deepak Jasani Head of Retail Research at HDFC Securities: "Markets corrected sharply on Friday with the Nifty closing in the red for the third consecutive session."
"The slide was led by index pivotals Reliance HDFC and ITC. Oil and gas stocks too fell sharply. Weak global cues and RBI changing its stance to calibrated tightening affected the market sentiments."
In a surprise move the RBI belied market expectations of a rate hike which was expected to arrest the free-fall in the rupee s value.
However the "neutral" stance of monetary policy was changed to "calibrated tightening".
On the currency front the Indian rupee closed at 73.77 (73.7675) per US dollar 19 paise weaker from its previous close of 73.58. It crashed to a low of 74.22 earlier in the day.
Investment-wise provisional data with the exchanges showed that foreign institutional investors sold stocks worth Rs 3 370.14 crore and domestic institutional investors bought stocks worth Rs 1 902.07 crore.
The only gainers at the Sensex were Infosys up 2.19 per cent at Rs 721.85; Tata Consultancy Services up 1.88 per cent at Rs 2 103.10; IndusInd Bank up 1.36 per cent at Rs 1 609.90; HDFC Bank up 0.10 per cent at Rs 1 962.85.
On the other hand major losers included ONGC down 15.93 per cent at Rs 146.95; Reliance Industies down 6.31 per cent at Rs 1 049.85; State Bank of India down 4.73 per cent at Rs 257.80; Adani Ports down 4.40 per cent at Rs 302.05; and Bharti Airtel down 4.27 per cent at Rs 296.75 per share.
--IANS ravi-rv/sed
