After the overnight rally, stocks retreated on profit taking today on National Stock Exchange after the US Central bank said it would reduce monthly bond purchases, raising concerns about potential liquidity crisis.
The euphoria and excitement surrounding RBI's unexpected decision yesterday to keep key policy rates unchanged proved short-lived as investors reacted negatively to US Federal Reserve's move.
Market players felt tapering of the easy money policy will lead to a liquidity shortfall in equity markets, including in India, where FIIs remained the key drivers.
The benchmark CNX Nifty tanked 51 points to close below the 6,200 level.
Financial counters boar the brunt of selling, while energy, infra and auto scrips also fell. However, technology and pharma stocks rallied on better prospects for US economy.
The market got off to a strong start following positive global sentiment and continued buying, but soon succumbed to profit taking as investors turned cautious.
It drifted further as sell-off intensified in late afternoon. But low-level buying in key heavyweights helped the market to regain some lost ground towards the tail-end.
Most Asian and emerging markets rallied with Japan's Nikkei soaring to six-year high taking cues from Wall Street's record close as investors reacted with enthusiasm to US Fed's decision on tapering and promise to keep interest rates low.
The Fed yesterday announced it would reduce its massive USD 85 billion-a-month bond buying programme by USD 10 billion in January citing improving economic recovery in US.
The Nifty swung between a high of 6,263.75 and a low of 6,150.70 before finishing at 6,166.65, posting a steep fall of 50.50 points, or 0.81 per cent, over the last close.
Kotak Bank, ICICI Bank, ONGC, L&T, HDFC, IDFC, Ambuja Cement, Tata Power, Asian Paints and NMDC were among the top index losers. Key gainers included HCL Tech, Maruti, Ranbaxy, Lupin, Wipro, Cipla, Sesa Sterlite, Sun Pharma, Infy and TCS.
Turnover in the cash segment rose to Rs 14,238.34 crore from Rs 13,494.03 crore yesterday. A total of 8,358.76 lakh shares changed hands in 61,79,843 trades, while market capitalisation stood at Rs 66,65,464 crore.
