Mumbai, Apr 9 (PTI) Benchmark equity indices declined on Wednesday after a day's breather in line with sharp losses in Asian markets amid escalating trade tensions even as the RBI slashed key interest rate by 25 basis points to support a shuttering economy hit by reciprocal tariffs imposed by the US.

Mirroring weak trends in Asian equities, domestic benchmark equity indices opened lower and continued the slide later in the day as the latest set of US tariffs, including a whopping 104 per cent levy on Chinese imports, took effect.

The 30-share BSE benchmark Sensex dropped 554.02 points to 73,673.06 in early trade. The NSE Nifty declined 178.85 points to 22,357.

Later, the Sensex quoted 393.77 points lower at 73,833.31, and the Nifty traded 137.70 points down at 22,398.15.

"Markets brace for heightened volatility amid the US imposing 104 per cent tariffs on Chinese imports, effective April 9, in response to Beijing's 34 per cent duties on US goods," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

The RBI on Wednesday slashed key interest rate by 25 basis points, for the second time in a row, to support a shuttering economy hit by reciprocal tariffs imposed by the US.

Following the rate cut, the key policy rate eased to 6 per cent, providing relief to home, auto and corporate loan borrowers.

In its last policy in February, RBI had trimmed the repo rate by 25 basis points to 6.25 per cent. This rate came after a previous rate reduction in May 2020. The last revision of rates happened in February 2023 when the policy rate was hiked by 25 basis points to 6.5 per cent.

RBI has lowered the GDP growth forecast to 6.5 per cent from the earlier projection of 6.7 per cent due to global uncertainties.

Last week, US President Donald Trump had announced a hefty 26 per cent reciprocal tariffs on Indian imports, effective April 9.

"RBI's monetary policy outcome was in-line with consensus estimates, and a 25 bps rate cut should augur well both for the financial system and the economy. Given the ongoing tariff war across the world, an accommodative stance, along with a stable inflationary scenario, would ensure buoyant credit growth and support our domestic environment. The rate cut is indeed positive for our bond markets, but the ongoing pressure on the US bond yield restricts the full extent of the impact in India," Umeshkumar Mehta, CIO, SAMCO Mutual Fund, said.

From the Sensex firms, Tech Mahindra, Infosys, Tata Steel, HCL Tech, State Bank of India, Bajaj Finance, Axis Bank, Larsen & Toubro Tata Consultancy Services and ICICI Bank were among the biggest laggards.

Nestle, Hindustan Unilever, Power Grid, Mahindra & Mahindra and Asian Paints were among the gainers.

In Asian markets, Tokyo's Nikkei 225 index, South Korea's Kospi and Hong Kong's Hang Seng were trading sharply lower while Shanghai's SSE Composite index quoted higher. Tokyo's Nikkei 225 index dropped over 4 per cent.

US markets ended significantly lower on Tuesday.

"Uncertainty reigns supreme. How global trade and the global economy evolve from this chaos remains to be seen," V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

Vijayakumar further said two things are clear: India will be one of the large economies least impacted by this Trump shake-out.

"Our domestic consumption segments are resilient. The crash in crude is a big positive for the Indian economy. Of course, a global recession, or worse, stagflation, can do a lot of damage," he added.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,994.24 crore on Tuesday, according to exchange data.

Global oil benchmark Brent crude dropped 3.63 per cent to USD 60.54 a barrel.

After Monday's drubbing, the BSE benchmark jumped 1,089.18 points or 1.49 per cent to settle at 74,227.08 on Tuesday. The Nifty surged 374.25 points or 1.69 per cent to 22,535.85. PTI SUM DR