When people throughout India were talking about Da Vinci Code, Reservations and Elections, something significant happened. The sensex tumbled by more than 800 points in a single day. Going by the records, this is the single largest intra day fall ever recorded in history (in terms of absolute numbers though)
I am not a finance person, I would not have detailed account and analysis on the situation but since I proclaim all the time that I have huge amount of common sense, I can talk about something that appealed to me. To start with it was a very good time to invest. Since most of the stocks were down by 4-5% than their regular values, an excellent oppurtunity exists. Further since markets are going down by this huge amount, they are bound to bouce back (Newton’s law). And finally with all the other investment oppurtunities being unattractive, equity markets is the in thing.
So why did the sensex tumble like it has never done before? It was attributed intially to global dip in stock prices. Then somehow there was a report that FIIs would be charged 40% interest and then to top everything else, the metals were doing badly. As they say a cascading effect setup in the market and the results are for everyone to see.
I would again say that I am not a finance guy but I think the entire stock market depending on just FII is bad for health. Is there a mechanism by which we limit the participation of FII in the bourses?