As pressure mounted amid fears of a slowdown in growth and a possible drop in earnings, stocks drifted lower and lower as the session progressed and eventually ended the day on a highly negative note today. Weakness in European markets amid lingering worries about U.S. and European economies too weighed on sentiment to an extent. 

The market, which was expecting a hike of 25 basis points in the repo rate, went sliding down sharply after the central bank announced a 50 basis points hike to 8%. The apex bank raised the reverse repo rate by 50 basis points to 7% even as it left the CRR and savings bank rate unchanged at current levels. The central bank revised the inflation target to 7% from an earlier forecast of 6%, while maintaining the growth rate forecast at 8%.

The mood was so bearish this afternoon that even some fairly impressive results from India Inc failed to arouse any buying interest. 

The Sensex, which nosedived to 18,481.63, losing nearly 400 points, ended the day with a loss of 353.07 points or 1.87% at 18,518.22. The Nifty  index of the National Stock Exchange settled at 5574.85, slightly off the day's low of 5560.15, recording a loss of 105.45 points or 1.86%.