It took less than three minutes for the Sensex to fall 1,507 points, the biggest such fall in its-28 year history. That is huge volatility and has the ability to take not just small investors but even bigger ones in line to let loose their hearts. Those with stakes in the market heaved a sigh of relief when it emerged out of its depression by the end of the day to close at levels that would give them a peaceful sleep.“The way the market has bounced back is phenomenal,” said Religare president (equity) Amitabh Chakraborty. “Rightly so,” added HDFC Bank chief economist Abheek Barua, “I don’t see foreign institutional investors (FIIs) packing or selling off in a big way, there is faith in the India story.”Over the past few weeks, the market was a witness to great runs — 16,000 to 17,000 in six trading days, 17,000 to 18,000 in seven trading days and then the big one: 18,000 to 19,000 in four trading sessions. Phenomenal as this was, it was largely driven by huge volumes of money coming from FIIs, half of it through the participatory note (PN) route.That the market would fall when the Securities and Exchange Board of India (Sebi) proposed to restrict this window on Tuesday was expected. According to Reliance Money chief executive officer (CEO) Sudip Bandyopadhyay, “The correction is welcome and is good for the market. There is no major calamity.” Will it fall tomorrow? “I think the sentiment and lack of confidence got captured during the day and it has come out of it,” he opined.Maybe, maybe not. But today’s fall is the result of a systemic intervention, which may be good for the market in the long term. According to ICICI direct.com head (retail) Anil Kaul, “Systemic interventions make the market more regulated, more structured and more transparent which is always good in the long term.”The country’s economic growth is well on track and so are the corporate second quarter results. “I am expecting good results from companies and the FIIs will not discount India’s growth and will value it at 30 per cent,” said Chakraborty. Even though the fundamentals of the Indian economy and companies remain strong, the fact remains that it was largely the FIIs, including money coming in through PNs, that had led the Sensex run from 15,000 to 19,000. That will slow down as an impact of the new regulation and there will also be some sell-off in the market. So, where are we headed now? “The bad news has not been factored entirely and we might see some corrections still coming,” noted Barua.
