Mumbai, Dec 16 (IANS): A benchmark index for Indian equities Friday fell sharply in afternoon trade as selling intensified in capital goods and banking stocks.

Traders booked profits in stocks which had risen in anticipation of the Reserve Bank of India not hiking interest rates. As expected, the apex bank in its mid-quarterly review of the monetary policy decided to maintain the status quo on key interest rates.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 15,868.78 points, was ruling at 15,818.46 points, 18.01 points or 0.11 percent down around 2.20 p.m., from its previous close at 15,836.47 points.

The Sensex had risen more than 232 points during the day.

The 50-scrip S&P CNX Nifty of the National Stock Exchange was also trading in the red at 4,738.75 points, down 0.16 percent or 7.6 points from its previous close.

The central bank also indicated that it would from this point onward look at easing interest rates as inflation had started declining and was expected to moderate to 7 percent by end-March.

Broader markets were ruling on a lacklustre note with the BSE 500 index down 0.14 percent. The BSE midcap index was trading 0.16 percent lower while the BSE smallcap index was up 0.09 percent.

The market breadth was negative with 1,290 stocks advancing, compared to 1,307 on the decline. Another 110 remained unchanged.

Asian markets closed in the green as data from the US showed an improving jobs scenario while an index manufacturing growth in the world's largest economy jumped to its highest level in May. Hopes of China introducing market boosting measures after its central bank interevened to stabilise the currency also helped investor sentiments.

The Japanese Nikkei nudged up 0.29 percent to close at 8,401.72 points. Hong Kong's Hang Seng moved up 1.43 percent and ended at 18,285.39 points, while the Chinese Shanghai composite index rose 2.02 percent to close at 2,224.84 points.

European markets were off to a quiet start.