In a sudden move, the United States' Federal Reserve yesterday, cut its discount rate by half a percent to 5.75%. That's the rate at which the central bank lends directly to banks. This comes as an acknowledgement by the Fed that market conditions have deteriorated and growth conditions have become constrained.

This move pushed the US markets in the green for the first time in seven sessions. This Fed action also got the European markets a shot in the arm in the fag end of trade.

But what does this move spell for Indian markets? Does it end the agony for markets here?

Ashwini Agarwal of Demeter Advisors said, "I think, making liquidity available for those who need it at this point in time is absolutely critical and that s exactly what the Fed has done. The core issue is, is this dosage of liquidity enough for those who are liquid and solvent to be able to get cash to tide over this problem short-term or will we need more dosage in the subsequent weeks? I do not have an answer to that and I doubt that anybody knows the answer to that, but it s a step in the right direction and it has obviously bolstered confidence in the short-run. "

He expects to see a rally on Monday in India as well, but volatility may remain over the next two-three weeks. Once the problem is isolated and paid for, will only equity markets come back much more stronger or at least, the bottom will be behind us, as they say.

To this, N Jayakumar, MD at Prime Securities, said, "It's certainly an intermediate bottom and a fairly resistant bottom from what I can see. In a loud and clear statement, the Fed has declared the US economy in dire need of crutches. This is the time they made the statement. The statement clearly illustrates that the excesses of the last four-five decades of excessive consumption and the consumer led boom was led by easy credit given to all kinds of people."

But, he adds, "The only question that we need to worry about from an Indian perspective is that if this slows down the US economy, that would be ok, but if they sends it into a recession, that s a different issue altogether. I believe we need to allow the Fed to worry about the size of the problem, there is no point in you and me agonizing about it."

From an Indian market perspective the big much awaited correction has come. Although, on the postive side, the markets including the currency movement have significantly outperformed every year.

Agarwal agrees with Jayakumar, "I agree with Jayakumar, India has outperformed a large part of the world at this point in time. Once over the next couple of weeks, all the adjustments have been made longer-term, the domestic economy will continue to do well. So even if we do see some more outflows and more pain from hereon, I think the opportunity from a medium-term perspective for investors to buy stocks is going to be very good going ahead."