New Delhi - Indian equities extended losses Friday as the benchmark Sensex tumbled 8 per cent to a two-year low as investors sold heavily after the central bank disappointed them by keeping key rates unchanged in its policy review.

The 30-share-sensitive index, which had shed 912 points over two sessions since Wednesday, lost another 782.62 points by mid-session Friday.

The Sensex fell sharply to 8,989.08, a loss of 8.01 per cent, by noon (06 30 GMT), after a credit and monetary review was announced by the Reserve Bank of India.

Banking, metal and realty stocks shed between 6 to 8 per cent to lead the Sensex to below 9,000, a level last seen in 2006.

Similarly, the broader 50-share Nifty index slipped by 247.75 points to 2,695.40, a loss of 8.42 per cent.

Market analysts said there were increased capital outflows by foreign funds and nervous selling by investors tracking weak global markets and poor quarterly earnings by corporates.

They said the central bank's failure to announce any changes in key rates to infuse liquidity into the banking system as well as concerns on India's growth contributed significantly to the fall.

The investors were expecting bold moves by the RBI such as a further cut in the Cash Reserve Ratio (money banks have to park with the RBI) to stem the liquidity crisis.

The RBI policy comes amidst a global financial crisis and an 11 per cent inflation rate in India.

The past few weeks have seen the central bank cut the key repo rate and the CRR to impart liquidity in the banking system.

Market analysts said a depreciating rupee, which breached the 50 rupee mark per dollar in the Forex markets in opening trade Friday, was another factor behind the falling trend. (dpa)