At its penultimate monetary policy review of the fiscal, the six-member Monetary Policy Committee (MPC) of the RBI kept the short-term lending rate unchanged at 6 per cent in its fifth bi-monthly policy review of the fiscal year.
Similarly, the NSE Nifty was trading lower by 78.70 points, or 0.77 per cent, at 10,039.55.
India's central bank left its key interest rates unchanged, as widely expected, on Wednesday. Meanwhile, Fitch Ratings lowered its forecast for India's economic growth for FY2017-18 and FY2018-19 to 6.7 percent and 7.3 percent, respectively.
The government and business leaders, however, have been pushing RBI to lower rates to provide an impetus to private investment and boost broader economic growth that has shown signs of revival. In August, the RBI made its only cut in 2017, of 25 basis points, and in October, it held steady.
The uncertainty about India's fiscal management is being further exacerbated as the government is due to unveil its budget for the next fiscal year in early February, before the RBI's next meeting. In October, it kept the rates unchanged.
Reverse repo rate is the rate of interest offered by the RBI when banks deposit their surplus funds with it for short periods. The decision on Wednesday would be aimed at striking a balance between strengthening the country's economic growth and securing the retail inflation target of 4 percent, plus or minus 2 percent on a durable basis, stated Scotiabank. "The recent rise in global crude oil prices may sustain, especially on account of the OPECs decision to maintain production cuts through next year", RBI said.
After five consecutive quarters of deceleration, GDP growth quickened to 6.3% in July-September, suggesting the Indian economy had shaken off some of the lingering effects of demonetization and the Goods and Service Tax, which was rolled out on 1 July.
The decision comes much to the expectation of experts and market-watchers who had predicted the stay in rates.