Mumbai, May 22 (IANS): The Reserve Bank of India's (RBI) repo rate cut and other liquidity measures failed to cheer the stock market as the BSE Sensex closed 260 points lower on Friday.

The central bank has reduced the repo rate by 40 basis points to 4 per cent, which seemed not enough to boost the market sentiments.

Rahul Sharma, Head of Research at Equity99 Advisor, said: "The Reserve Bank of India's surprise move to cut repo rate and other liquidity measures failed to cheer the stock market. Sentiments were also affected by weak trading in other Asian and European markets."

He further said that traders were seen squaring off long positions ahead of a long weekend. Trading will be shut on Monday on account of Id-ul-Fitr.

Heavy selling was witnessed in the finance and banking stocks during the day, which pulled the indices lower. The S&P BSE Finance index fell 3 per cent and the BSE Banking index was down 2.44 per cent.

"Today's selling was led by banking and NBFC stocks which tumbled after RBI further extended the loan repayment moratorium for another three months up to August 31 and cut in GDP projections for the current year," Sharma said.

Giving a bleak outlook for the Indian economy, RBI Governor Shaktikanta Das said that the country's GDP growth for the financial year 2020-21 is likely to be negative although there may be some pickup in growth impulses in the second half of the year.

The BSE Sensex closed at 30,672.59, lower by 260.31 or 0.84 per cent from the previous close of 30,932.90.

It had opened at 30,822.78 and touched an intra-day high of 31,107.91 and a low of 30,474.88 points.

The Nifty50 on the National Stock Exchange closed at 9,039.25, lower by 67 points or 0.74 per cent from the previous close.

Among the Sensex stocks, the major losers were Axis Bank (down 5.65 per cent), HDFC (down 4.99 per cent) and Bajaj Finance (down 4.67 per cent), while the top gainers were Mahindra & Mahindra (up 4.46 per cent), Infosys (up 3.01 per cent) and Asian Paints (up 2.72 per cent).