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Description
Indian share markets witnessed the biggest crash since the stock scam of April 28, 1992 following the uncertainties over future of economic reforms. Large selling by the FIIs and hedge funds added significantly to the crash on the Sensex as foreign investors are looking for a commitment from the government towards the continuation of reforms and the promise of stable governance. Irresponsible comments from politicians further amplified the disaster. Politicians must understand that markets hate uncertainty.
Investors were taken in the early hours of May 15 when the results of the recent general elections were being announced. Stock market figures indicated that the market was declining. Within no time the stock markets crashed with the news of NDA losing at the center. This fall in the sensex is the major intra-day fall in the past four years. The mere change in the government at the center does not seem to be a logical reason for such a crash in the markets. Then what are the reasons and issues involved?
Where is the shining India gone? Few days back there was euphoria among all sectors and the markets were bullish. We have to question ourselves whether that euphoria came from within or was a created one. The policies of the NDA government were well received by the market participants and the markets were overflowing with liquidity. The FIIs started perceiving India as an important investment avenue. All these together brought a feel-good factor in the markets. Most of the market participants opined that NDA would come back to power and that the market-driven developments would continue. But the fact that NDA was losing the elections has inculcated a sense of insecurity among the market participants. An interruption in the ongoing developments is not perceived as a welcome move by the market participants. With the unexpected happening, there was a knee-jerk reaction among the market participants and their sentiments were badly affected.
