The key equity indices, Sensex and Nifty, faced a second consecutive day of decline on Friday, driven by losses in HDFC Bank and ICICI Bank, compounded by a negative trend in Asian and European markets.

The domestic market remained subdued following the RBI's monetary policy announcement and the unexpected decision to reduce cash within the banking system.

The 30-share BSE Sensex dropped by 365.53 points or 0.56%, settling at 65,322.65. Throughout the day, it saw a dip of 413.57 points or 0.62% to reach 65,274.61.

Meanwhile, the NSE Nifty witnessed a decline of 114.80 points or 0.59%, concluding at 19,428.30.

Among the major losers in the Sensex group were IndusInd Bank, NTPC, Asian Paints, Hindustan Unilever, JSW Steel, Tech Mahindra, Bajaj Finance, Infosys, Wipro, ICICI Bank, Bajaj Finserv, HDFC Bank, and Tata Motors.

Conversely, HCL Technologies, Power Grid, Titan, Reliance Industries, UltraTech Cement, Tata Steel, State Bank of India, and Mahindra & Mahindra registered gains.

The Reserve Bank of India (RBI) opted to maintain its key interest rates for the third consecutive meeting on Thursday, yet indicated potential tightening of policies if escalating food prices persist in driving inflation upwards.

This hawkish stance was further emphasized by the unexpected decision to reduce cash within the banking system through an increase in the incremental cash reserve ratio (I-CRR) to 10% on incremental NDTL (net demand and time liabilities) over the past three months.

This move aims to absorb a significant portion of the excess liquidity stemming from the re-circulation of Rs. 2,000 notes and the substantial dividend provided to the government by the RBI.

Across Asian markets, Seoul, Shanghai, and Hong Kong concluded with losses, while European markets traded in the negative zone. In contrast, US markets closed with gains on Thursday.

Foreign institutional investors (FIIs) turned buyers on Thursday, acquiring equities valued at Rs. 331.22 crore, according to exchange data.

The global oil benchmark, Brent crude, experienced a 0.57% decline, reaching USD 85.91 per barrel.

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