Indian equity benchmark indices extended losses on Thursday after the Reserve Bank of India announced its monetary policy decision. The RBI's Monetary Policy Committee has cut the key repo rate by 25 basis points for the third consecutive time to 5.75 percent and changed the stance to 'accommodative' from 'neutral'.

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The BSE Sensex plunged over 450 points or 1.16 percent at 39,621.32 while Nifty50 tanked 134.65 points or 1.34 percent at 11,860.20. Nifty Media remained the worst performer of the day, down 2.58 percent.

The midcap and smallcap indices also plunged over 1 percent.

Rate-sensitive sectors like the auto, real estate, banks and financial services, are in the negative territory after the RBI announced a cut in the repo rate. Nifty Auto was trading lower by 0.94 percent dragged by M&M, MRF and Ashok Leyland.

The Nifty PSU Bank index was trading the lowest, by 4.18 percent on the back of major losses in Syndicate Bank, Bank of Baroda, Allahabad Bank, Union Bank and others.

While, Nifty Realty slumped 2.26 percent due to Godrej Properties, DLF, Oberoi Realty, Phoenix Mills along with others.

Global research firm Bank of America Merill Lynch in its research report said, "Expect RBI MPC to cut another 75-100 bps by March 2020. RBI should pause after October repo rate cut as inflation will climb to 5 percent."

It also added, "Expect RBI to allow money market to sustain in surplus reverse repo mode until September. Expect RBI to continue to infuse $2-3 billion of durable liquidity voa OMO (Open Market Operations)/FX (Forex) swaps every month."

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