Stocks extended slide in early afternoon trade after the Reserve Bank of India (RBI) slashed repo rate by 25 basis points. At 12:27 IST, the barometer index, the S&P BSE Sensex, was down 279.02 points or 0.7% at 39,804.52. The Nifty 50 index was down 98.95 points or 0.82% at 11,922.70. Bank stocks declined after the RBI policy.

On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 5.75% from 6% with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 5.50%, and the marginal standing facility (MSF) rate and the Bank Rate to 6%. The MPC also decided to change the stance of monetary policy from neutral to accommodative. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth, RBI said.

Key indices were trading with small losses in early trade as trading resumed after a local holiday. Domestic stock market were closed yesterday, 5 June 2019, on account of Id-Ul-Fitr (Ramzan Id). Key indices extended decline triggered in early trade on selling pressure in index pivotals. The Sensex fell below the psychological 40,000 level while the Nifty declined below the psychological 12,000 level. Stocks were trading on a weak note in mid-morning trade.

The S&P BSE Mid-Cap index was down 0.82%. The S&P BSE Small-Cap index was down 0.73%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 784 shares rose and 1512 shares fell. A total of 136 shares were unchanged. Breadth was strong in early trade.

Vedanta (down 2.12%), L&T (down 2.08%) and M&M (down 1.71%) edged lower from the Sensex pack.

Bank stocks declined after the Reserve Bank of India in its monetary policy meeting today, 6 June 2019, cut the policy repo rate by 25 basis points to 5.75% with immediate effect.

IndusInd Bank (down 5.44%), Yes Bank (down 2.62%), State Bank of India (down 1.89%), IDBI Bank (down 5.04%), HDFC Bank (down 0.87%), declined.

PSP Projects rose by 3.26% after the company announced that it received work orders worth Rs 155.61 crore.

Overseas, Asian shares were trading mixed Thursday as investors kept a close watch on impending US tariffs on Mexico while trade talks with Beijing remained at a standstill. South Korean markets were closed for a holiday.

American and Mexican officials said late Wednesday that progress was being made at immigration talks at the White House, but President Donald Trump tweeted that it was not nearly enough.

US stocks closed solidly higher Wednesday, after volatile morning trade that saw benchmarks flipping between gains and losses, as investors digested a round of conflicting economic data that showed strength in the U.S. services sector but signaled a potential weakening of the labor market.

In economic data, the Institute for Supply Management services sector index came in at 56.9%, compared with April's 55.5%. The Federal Reserve released its beige book for April through mid-May, which described the U.S. economy as expanding at a modest pace overall, though it also reported anecdotal evidence that labor shortages and new tariffs are holding back growth.