BSE Sensex falls 151 points as US Fed announces cut in economic stimulus
- Supreme Court denies bail for Sahara chief Subrata Roy
- December 16 gangrape: Delhi HC upholds death sentence of four convicts
- US investigators suspect missing Malaysia jetliner flew for hours after losing contact
- Shiv Sena hits out at BJP, asks it to follow "alliance dharma"
- US court dismisses Devyani Khobragade's indictment in visa fraud case
Hit by fears over the impact of the Ben Bernanke-led US Federal Reserve announcing a cut in its stimulus, the benchmark BSE Sensex dived over 151 points at the close today on selling in banking, capital goods and power shares.
The Federal Open Market Committee yesterday announced a plan to cut monthly bond purchases to USD 75 billion from next month compared to USD 85 billion now, a decision that is expected to cause some volatility in emerging market assets.
After opening with a 100-point rise on firm Asian cues, the Sensex hit day's high of 21,017.45 but the gains proved to be short-lived as nervous investors resorted to selling. It fell by 151.24 points, or 0.73 per cent, to 20,708.62.
"Emerging market economies (EMEs) have been caught off guard on the timing of the Fed decision, as consensus seemed set on March 2014. Chances of a capital flight to the US and a strong USD are real, and EMEs could suffer as higher than expected equity and debt outflows can materialise than already priced in," said Ashish Kumar, Economist, Elara Securities in a report.
Finance Minister P Chidambaram tried to calm the sentiments by assuring that the government could take more steps to deal with emerging situation.
"I think the consequence should not be large. Even if there are some consequences then I think we are better prepared," he said in New Delhi.
In the currency markets, the rupee was trading lower at 62.18 versus dollar. The dollar climbed against most of its 16 major counterparts after the US Fed's taper decision.