The move by the Federal Open Markets Committee of the US Federal Reserve (US Fed) to slash the fund rate and discount rate by 25 basis points to 4.5% and 5% respectively, helped the 50-share S&P CNX Nifty of the NSE cross the psychological 6,000-point mark for the first time in its 13-year history.
It touched a lifetime high of 6,011.95 points, only to retreat and close the day at 5,866.45 points, losing 34.2 points or 0.58%. Nifty’s climb was the fastest 1,000-point rally, taking just 24 trading sessions from the 5-k level. The 30-share Sensex of the BSE, meanwhile, closed the day at 19,724.35 points, down 113.64 points or 0.57%.
Market experts feel the Fed?s slashing of rates would result in increased fund flows to emerging markets, with India likely to benefit more than its peers. High economic growth, impressive quarterly corporate results and the sectoral diversity that India offers to foreign investors makes
it a prime location for global fund managers.
However, after a euphoric climb on the rate-cut announcements, domestic equity indices fell mainly due to profit taking by investors at higher levels. Anil Advani, head of research, SBICAP, said, ?The market reacted positively to the US Fed?s decision and in the morning helped the Nifty cross 6k. However, investors took the Nifty?s 6-k level as a major benchmark barrier today to book profits and, as a result, the market ended in the red.?
Dealers say that profit booking at the fag end of the session was also triggered by unconfirmed reports that the Centre may hike short-term capital gains tax on stock market trades to cap the excessive run-up in prices witnessed in past two-three months, and also curb excessive trading in the retail segment.
Another dealer said, ?The mood in the market was a little subdued because of the neutral direction that the US Fed gave in its statement. It indicated that another interest rate cut might not happen at its December 11 meeting.?