In its second bi-monthly policy review, the RBI cut interest rate by 0.25 percent for the third time this year. The 30-share index -- which fell by over 347 points soon after RBI announced monetary policy -- was down sharply by 642.11 points or 2.31 percent to 27,206.88.

All the sectoral indices led by banking and realty, were trading in negative terrain. The wide-based National Stock Exchange index Nifty dipped below the crucial 8,300-level by tumbling 177.70 points or 2.11 percent to trade at 8,255.70.

RBI, meanwhile, left all other policy tools like cash reserve requirement unchanged at 4 percent and Statutory Liquidity Ratio (SLR) at 21.5 percent. The RBI governor Raghuram Rajan lowered projections of the economic growth as measured by GVA (Gross Value Added) to 7.6 percent from 7.8 percent estimated in April due to global factors and likely impact of below normal monsoon.

Sector-wise, the BSE realty index suffered the most by plunging 3.10 percents, followed by bankex by 3.02 percent.

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