Sensex tanks 112 pts

Key benchmark indices edged lower in choppy trade on Tuesday as the stock market had already factored the 25 basis points (bps) reduction by the Reserve Bank of India in its key policy rate review.

Initially the market showed some enthusiasm, but as the details of the policy review trickled in with the RBI Governor D Subbarao saying there was no room monetary easing in future unless and until the country's inflation and the current account deficit improves significantly over and above the RBI's expected level, which dampened investors and they begun booking profits.

Simply put, the market failed to cheer the RBI's decision of reducing key rates by 25 basis points and also releasing Rs 18,000 crore additional liquidity into the financial system.

Investor sentiment in D-Street was also thwarted by the RBI's decision to lower the domestic gross domestic product (GDP) growth to 5.8 per cent from 6.5 per cent growth it had earlier (in July, 2012) projected.

So much so, the barometer index of BSE fell below the psychological 20,000 level. The popular Sensex at BSE shed 112.45 points or 0.56 percent to 19,990.90, its lowest closing level from January 24, 2013. The S&P CNX Nifty at NSE lost 24.90 points to settle at 6,049.90 in the closing.