The US Federal Reserve’s decision to press ahead with stimulus cuts and many emerging market central banks’ move to raise interest rates sent the Asian stocks into a tailspin on Thursday and failed to stem their currencies from sliding against the US dollar.

Indian markets — stocks, currency and bonds — trembled on Thursday with the benchmark stock index hitting a two-month low, Government bond prices falling sharply and the rupee closing lower than the previous day. This upheaval in financial markets came despite Finance Ministry’s efforts during the day to soothe the nerves of investors and market participants.

Other factors too Besides the US Fed taper issue, the expiry of the current series (January) and beginning of a new one in the futures and options segment in the Indian equity market led to huge volatility in stock prices.

Reacting to the overnight announcement of US Federal Open Market Committee that it will trim the monthly bond purchase programme by $10 billion to $65 billion, the Finance Ministry on Thursday said this decision will not affect Indian markets.

All steps will be taken by the Government and the Reserve Bank of India to ensure stability in the financial markets.

Later in the day, Economic Affairs Secretary Arvind Mayaram pointed out that even at the trimmed level of $65 billion a month, the quantum of the US Fed’s monthly asset purchase amount was a significant sum.

“There is not going to be a sudden contraction of liquidity. So there should be no undue worry on this account,” he said.

Mayaram highlighted that the fundamentals of the Indian economy were strong and saw no major impact on it from the US Federal Reserve’s decision to continue with its stimulus cut.

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