RBI Logo.
RBI Logo. Reuters

Indian stocks fell on Wednesday, dragged by lenders after the Reserve Bank of India kept interest rates unchanged at its monetary policy.

The central bank keept the key interest rate unchanged at 6 percent as it feared that inflation may top the central bank's medium-term target of 4 percent.

The S&P BSE Sensex dropped 0.63 percent at 32,597 while the broader NSE Nifty declined 0.73 percent to 10,044.

Among the top Sensex losers, Tata Steel fell 1.2 percent, State Bank of India dropped 2.3 percent, Sun Pharma declined 2.2 percent while HDFC shed 1.9 percent.

Banking stocks fell the most. Punjab National Bank fell 2.5 percent, Axis Bank 0.7 percent, Bank of Baroda 2.2 percent, ICICI Bank 1.9 percent and HDFC Bank 1.3 percent.

Tata Steel lost 1.2 percent after Bloomberg reported that Germany's biggest union has given Thyssenkrupp AG until December 22 to guarantee jobs and investments before the labour group will give its blessing to a joint venture with Tata Steel.

Market breadth was in the favour of gainers, with about 2 stocks advancing to every 1 stock that declined.

Asian stocks posted their longest losing streak in two years as commodities companies led declines.

Weaker copper also checked risk sentiment. MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.9 percent.

Investors are awaiting catalysts that would provide reason to add to risk assets before the year draws to a close. Friday's U.S. jobs report is the next big data release on the calendar.