RBI, which had cut interest rate by 125 basis points or 1.25 percent in 2015, retained the benchmark repo rate at 6.75 percent.

The central bank governor Raghuram Rajan also pegged the growth rate for the current fiscal at 7.4 percent.

Meanwhile, rupee weakening by 14 paise to 67.98 during the day against the dollar also weighed on the domestic equities.     Asian and European shares took a plunge as renewed concerns over health of the global economy led to a sharp drop in oil prices.

The BSE Sensex took off on a positive note at 24,868.21 and advanced to the day's high of 24,928.75 after RBI left the key interest rate unchanged in 6th bimonthly policy review.

Higher levels could not be sustained as participants locked in gains amid a weak opening in Europe. The index finally settled 285.83 points or 1.15 percent down at 24,539 after hitting a low of 24,460.53.

The NSE Nifty broke below the 7,500-mark by tumbling 100.40 points or 1.33 percent to 7,455.55. Intra-day, it shuttled between 7,576.30 and 7,428.05.

Out of the 30-share Sensex pack, 25 ended lower. Prominent losers were Tata Steel, NTPC, BHEL, Cipla, Sun Pharma, ONGC, Coal India, RIL, ICICI Bank, Adani Ports, Tata Motors, Axis Bank, SBI, M&M, Maruti Suzuki and GAIL India.

Bucking the trend, shares of Bajaj Auto gained 1.48 percent to Rs 2,362.55 after the company reported 1.78 percent growth in total sales in January. Bharti Airtel and Infosys also ended in positive terrain.

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