Weakness in the rupee against the US dollar also weighed on domestic stocks. The local unit fell 11 paise to 70.60 against the US dollar intra-day.
Benchmark equity indices fell for the second straight day on Wednesday as the RBI left the repo rate unchanged while global markets suffered a sell-off as concerns over the US-China trade war resurfaced.
The BSE Sensex tumbled 249.90 points, or 0.69 per cent, to close at 35,884.41.
Similarly, the broader NSE Nifty fell 84.55 points, or 0.74 per cent, to end at 10,784.95.
The fall in domestic equities was led by metal, pharma, auto and banking stocks.
The Reserve Bank of India on Wednesday left the repo rate unchanged while maintaining the stance of 'calibrated tightening' of policy.
The key rate remains at 6.5 per cent. This is for the second time in a row that the central bank did not tinker with the interest rate.
Weakness in the rupee against the US dollar also weighed on domestic stocks. The local unit fell 11 paise to 70.60 against the US dollar intra-day.
Global investor sentiment turned weak after uncertainty over negotiations between the US and China on their trade dispute.
US President Donald Trump and his Chinese counterpart Xi Jinping had agreed to a truce at the G20 meet.
Trump, however, muddied the waters by suggesting the possibility of an extension of trade talks.
"The negotiations with China have already started. Unless extended, they will end 90 days" from Saturday, Trump tweeted.
On a net basis, foreign portfolio investors (FPIs) sold shares worth Rs 55.89 crore Tuesday, while domestic institutional investors (DIIs) were net sellers to the tune of Rs 521.38 crore, provisional data available with BSE showed.
Brent crude, the international benchmark, was trading 0.53 per cent lower at USD 61.75 per barrel.
Elsewhere in Asia, Korea's Kospi fell 0.62 per cent, Japan's Nikkei dropped 0.53 per cent, Hong Kong's Hang Seng shed 1.62 per cent and Shanghai Composite Index gained 0.61 per cent.
In Europe, Frankfurt's DAX shed 0.91 per cent and Paris' CAC 40 fell 0.97 per cent. London's FTSE too slipped 0.95 per cent.
Photograph: Danish Siddiqui/Reuters
