The Sensex closed at 19435, down 67 points and the Nifty was at 5831, down 29 points.
The Reserve Bank of India (RBI) has increased repo rate by 25 bps to 6 percent and reverse repo rate by 50 bps to 5 percent to contain rising inflation.
Suzlon Energy, DLF, Maruti Suzuki, Sun Pharma were among the top gainers with 3.00 percent, 2.51 percent, 2.09 percent, 1.81 percent up respectively.
Infosys, GAIL, Sterlite Ind, Reliance Comm were among the topl losers with 2.85 percent, 2.71 percent, 2.69 percent, 2.50 percent down respectively.
Nifty recovers to 5900; banks up
At 1:32 am, the benchmark Nifty showed smart recovery by touching 5900 level after initial marginal sell-off.
RBI's credit policy announcement pushed the markets lower by around 100 points on Sensex but immediately that was recovered, which seemed like markets factored in key rate hikes.
The Sensex was trading at 19609, up 108 points and the Nifty was at 5893, up 32 points.
Financials were up by 1pc each whereas Infosys, TCS, Reliance Industries and BHEL along with metal companies' were on drag.
Nifty continues to go red
At 12:12 pm, the NSE Nifty was trading with negative bias. It slipped further post RBI's credit policy but did not fall much as benchmarks already discounted a hike in policy rates.
The Reserve Bank of India (RBI) has increased repo rate by 25 bps to 6pc and reverse repo rate by 50 bps to 5pc. The Central Bank said inflation remained a dominant concern.
Nifty opens on negative note
The benchmark Nifty started on negative note amid volatility, after witnessing a rally for the past seven sessions where it gained 380 points.
At 9:01 am, the Sensex was trading at 19514, up 12.6 points and the Nifty was at 5861, up 0.35 point. The CNX Midcap rose 13 points to 9148.
The frontliners were ONGC, GAIL, SBI, HUL, ITC, Tata Steel and Bharti Airtel
Markets were dragged by Ambuja Cements, Maruti, TCS and DLF, Unitech and HDFC Bank
Asian markets also added to the negative note in the market.