The 30-share Sensex ended down 151 points at 20,709 and the 50-share Nifty ended down 51 points at 6,167.
However, dollar's rise against other currencies overseas capped the gains
The home currency failed to keep momentum going and largely traded in a narrow range with positive bias in the absence of any market moving factors
The RBI had opened special swaps windows to attract deposits from non-resident Indians and allow oil-marketing companies to source dollars.
The S&P BSE Sensex slipped 305 points to end at 25,400 and the Nifty50 dropped 87 points at 7,783.
This is its lowest level since August 30
The MPC headed by RBI Governor Shaktikanta Das will announce the resolution of the meeting at around noon on Thursday.
Moody's has a 'Baa3' rating for India, with a positive outlook.
Samvat 2071: Sensex drops most in 4 years
State Bank of India's (SBI) two-year-long wait to expand its operations in the United States is set to end with the New York State Banking Department (NYSBD) clearing the bank's application for opening another branch, senior SBI officials confirmed.
Markets slumped for fourth straight session this Monday as investors braced for the central bank meeting with caution.
The 50-issue NSE Nifty too cracked below the 11,400-mark and hit a low of 11,311.60, before finishing 102.65 points, or 0.90 per cent down at 11,354.25.
Ukraine fears weighed on sentiment, with Russia rejecting a peace proposal amidst civil war-like situation in the former Soviet union republic.
ICICI Bank, HDFC Bank, IndusInd Bank down between 0.2%-1.4% each.
Strong dollar will impact financial system in India.
Modi's Atma Nirbhar Bharat Abhiyan or Self-reliant India Mission is about 10 per cent of India's GDP in 2019-20 and would rank behind Japan, the US, Sweden, Australia and Germany. But unlike most of the relief packages announced globally, Rs 20 lakh crore is not entirely in new spending and includes Rs 1.7 lakh crore package the government had announced in March as well as the steps taken by the Reserve Bank of India (RBI) such as liquidity enhancing measures and interest rate cuts.
Emerging economies should also be mindful of growth.
The BSE benchmark Sensex on Wednesday plunged about 275 points to close at 25,246 on across-the-board selling as costlier oil due to rising conflict in Iraq threatens to hurt the India economy.
Gold price is declining due to the strengthening of dollar in the wake of the US Federal Reserve's move to control rate on inflation concerns.
It fell 11 per cent in 2013, its third successive annual loss.
Nifty PSU Bank index gained 1% led by Allahabad Bank, Andhra Bank, Syndicate Bank and IDBI Bank
The RBI is expected to build reserves so the source of primary liquidity creation is backed by forex reserves.
The foreign inflows to the country will remain unchanged as the cut in the interest rates by US Federal Reserve is too minimal to affect the global investment scenario, analysts say.The US market went up after the rate cut was announced and some of the Asia markets also gained. Indian markets too opened higher on Thursday but Sensex plunged about 200 points due to profit booking, Kejriwal added.
The US Federal Reserve, on Wednesday, announced a 0.25 per cent cut in benchmark interest rate, which is expected to increase capital flow from foreign institutional investors in the Indian stock market.
The 30-share Sensex lost 22 points to close at 27,090 and the 50-share Nifty gained 7 points to end at 8,121.
A day after Federal Reserve Chairman Ben Bernanke announced the rate cut, FIIs bought shares worth over Rs 2,400 crore (Rs 24 billion), lifting the index up by 650 points, one of its biggest intra-day gains.
The 30-share Sensex dropped 68.16 points at 18,664.88 and the 50-share Nifty fell 23.15 points at 5,519.10 levels.
US Federal Reserve Chairman Ben S Bernanke held talks with RBI Governor Duvvuri Subbarao in Mumbai.
The Indian rupee on Thursday appreciated by 12 paise to end at 66.71.
Bouts of dollar demand from importers put pressure on the rupee
Foreign institutional investors added $20.10 billion in equities while they pulled out $7.97 billion from the debt market, resulting in total net flows of $12.13 billion.
The BSE mid-cap and small-cap indices ended flat against Sensex's 0.4% up-move.
Among major gainers, ITC, Reliance Industries, Dr Reddy's and HDFC rose up to 3 per cent.
Given Indian corporates's high indebtedness, new credit will be used for servicing loans rather than building factories. This is setting us up for more companies on life support and more zombie banks, warns Rahul Jacob.
A smart rebound in the stock market and sustained capital inflows restricted the rupee loss
What is killing the risk appetite of the bond buyers is the inconsistency in the central bank's approach. It needs to allow the yield to find its own level, gradually. To ensure that, the RBI may adopt a similar approach with which it handles a slipping rupee, asserts Tamal Bandyopadhyay.
Unwinding of long dollar positions by banks too aided the sentiment
Fresh demand for the American unit from importers put pressure on the rupee.
The rupee had plunged by 48 paise, logging its biggest fall in more than five weeks, to close at over one-month low of 61.13 against the greenback on Monday following demand for the US currency from importers.
Crucially, the US central bank softened the blow by making its forward guidance even more dovish.
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