BENGALURU, Aug 10 Reuters Indian shares declined on Thursday, dragged by financials on the central bank39;s measures to reduce excess liquidity, and consumer stocks on inflation concerns, after the Reserve Bank of India held its key rates steady, as expected.

The Nifty 50 closed 0.46 lower at 19,543.10, while the SP BSE Sensex fell 0.47 to 65,688.18.

While the RBI kept the key repo rate unchanged for the third time in a row at 6.5, Governor Shaktikanta Das said there could be a substantial rise in headline inflation in the nearterm and flagged uncertainty in the domestic food price outlook.

The RBI also raised its retail inflation forecast for fiscal 2024 to 5.4 from 5.2 earlier.

Consumer stocks like Asian Paints, ITC, Britannia Industries and Nestle India were among the top Nifty 50 losers.

Sectors sensitive to domestic interest rates like financials, banks, publicsector banks, private lenders, auto and realty fell between 0.25 and 0.90.

The RBI also asked banks to set aside a larger part of incremental deposits under the cash reserve ratio CRR to tighten liquidity in the near term.

Overall, the incremental CRR was unexpected and a reduction in liquidity surplus represents monetary tightening, said Nikhil Gupta, chief economist at brokerage Motilal Oswal Financial Services.

The governor said the measure will be temporary and the RBI will review it on Sept. 8.

The central bank39;s commitment to tackle inflation suggests that rate cuts are clearly out of sight…