Benchmark indices BSE Sensex and NSE Nifty tanked over 2 per cent on Tuesday, despite the Reserve Bank of India (RBI) slashing the repo rate by 25 basis points, which was in line with market expectations. Bleak global cues and profit booking in rate sensitive stocks dampened market sentiments.

The BSE Sensex closed 516.06 points, or 2.03 per cent, down at 24,883.59, while Nifty index settled 167.15 points, or 2.15 per cent, lower at 7,591.65.

In the Nifty pack, 47 stocks ended the day in red with Adani Ports falling the most — 6.62 per cent, followed by State Bank of India (5.62 per cent), ICICI Bank (down 5.38 per cent), Bharti Airtel (down 5.22 per cent) and Bank of Baroda (down 5.15 per cent). On the other hand, BPCL, Power Grid, HCL Tech and Lupin gained 0.59 per cent, 0.25 per cent, 0.21 per cent and 0.07 per cent, respectively.

Volumes for Nifty stocks stood at 2,099 lakh, higher than Monday’s volumes of 1,602 lakh for Nifty stocks.

Sectorwise, the BSE Consumer Durables index (up 0.26 per cent) stood the only gainer in the BSE sectoral indices list. Rest all other indices ended the day in red. The BSE Telecom index, BSE Bankex and BSE Auto index plunged 3.71 per cent, 3.21 per cent and 2.82 per cent, respectively.

Vinod Nair, head of research, Geojit BNP Paribas Financial Services, said, “Today’s sharp correction does not make us feel that market is overreacting to the RBI’s decision as investors had already got 25 bps cut in interest rate. The emphasis on liquidity is a positive action and it may help to limit further steep correction in the medium-term. Now the investors will focus towards global market and Q4FY16 results which will kick start from next week.”

As widely expected by the markets, RBI governor Raghuram Rajan cut key interest rates by 25 basis points, taking repo rate to 6.5 per cent. RBI kept CRR unchanged at 4 per cent but reduced the minimum daily maintenance of CRR from 95 per cent to 90 per cent. RBI also narrowed the policy rate corridor from 100 bps to 50 bps which would mean, reverse repo would now stand at 6 per cent and MSF would stand at 7 per cent.

Among day’s other major market moving events, shares of DLF, Indiabulls Housing and Apollo Tyres extended their losses on Tuesday after the Finance minister in consultation with PM Narendra Modi, set up a probe to cover 500 Indians, including the promoters of above companies amidst the recent leaks made by Panama Papers. DLF shares closed 4.51 per cent down at Rs 113.30, Indiabulls Housing Finance shares slid 2.84 per cent while Apollo Tyres closed 3.33 per cent down at Rs 165.55.

On the other hand, Relaxo Footwear rallied 13.78 per cent while Liberty Shoes rallied by 4.40 per cent on BSE over the news. Achin Goel, head, wealth management and financial planning, Bonanza Portfolio said, “Shares of footwear stocks rallied in Tuesday’s session after the AAP government rolled back the 5 per cent hike in VAT on low-cost footwear.”

Selling got intensified after European counters have made a feeble start on Tuesday, with CAC, DAX and FTSE were trading with a cut of around two percent. Asian equity indices ended mostly in red pressured by slumping crude oil prices and mixed messages from Federal Reserve policymakers on the outlook for US interest rate rises.

Most of the Asian markets suffered sharp sell-off on Tuesday, as the oil resumed its plunge on uncertainty of an output cut at the upcoming OPEC and Non- OPEC members meet. Traders also remained concerned ahead of the releases of US Federal Reserve’s minutes from its latest meeting on Wednesday and struggled to find fresh reasons to buy. The Japanese markets witnessed cut of over two percent after the yen jumped to a 17-month high. Also, the latest survey from Nikkei revealed that activity in Japan’s services sector remained unchanged in March. The Hong Kong markets too lost around two per cent, however the Shanghai Composite Index that resumed trading after a Monday holiday, bucked the regional trend and gained 1.4 per cent, as investors digested better-than-expected manufacturing surveys released over the weekend.