Indian stocks ended flat on Wednesday after the Reserve Bank of India kept its policy rates unchanged in a bid to defuse inflationary pressures and understand the impact of demonetisation on the economy.

The hawkish central bank kept its repo rate constant at 6.25 per cent and the reverse repo rate at 5.75 per cent. The bank rate remained at 6.75 per cent. The RBI also removed all restrictions on cash withdrawals from saving banks accounts over two stages, ending March 13.

Meanwhile, the benchmark Nifty, which dipped to as low at 8,718 points once the policy was announced, closed flat at 8,769 points as traders covered their short positions.

RBI's Governor Urjit Patel highlighted several concerns that went into keeping rates static. Rising energy prices, uncertain direction of economic policy in the US and EU, persistent fuel prices led inflation and the unknown impact of local demonetisation were factors that kept rates unchanged, he said.

“The committee remains committed to bringing headline inflation closer to 4 per cent on a durable basis and in a calibrated manner and this requires a decline in inflation expectations,'' Patel told reporters in Mumbai. “The committee has decided to change the stance from accommodative to neutral while keeping the policy rate on hold to assess how the transitory effects of demonetisation on inflation and the output gap play out.''

Bond markets reacted adversely to the RBI's change in stance and India's 10-year bond yields are now expected to climb up to 6.65-6.75 per cent from 6.429 per cent now as hopes of rate cuts fade.

Here are the major events of the trading day:

* The Sensex fell 45 points to 28,290 points on the Bombay Stock Exchange with Coal India being the top gainer while Dr. Reddy's losing the most. State Bank was the top traded stock by value.

* ACC, Grasim, Ambuja Cement and Bharti Airtel gained between 1.8-2.7 per cent and were among 32 gainers on the Nifty.

* Axis Bank, Bharti Airtel, ITC, Dr. Reddy's and HCL Tech dropped 0.8-1.5 per cent and were among 19 stocks that lost ground on the Nifty.

* Titan and Tata Steel, post a strong set of quarterly numbers, were the top two traded stocks by value along with Axis Bank and Indiabulls Housing Finance.

* Future Consumer, BHEL, Ashok Leyland and South Indian Bank figured on the list of most active securities tracked by volume.

* The Nifty 100, 200 and 500 indices inched higher while mid caps and small caps gained more traction.

* The trend was mixed in the sectoral space with banks recording losses while media and auto stocks trending higher.

* The bulls and bears were evenly matched with 781 shares rising versus 706 that fell on the National Stock Exchange.