Week of records for bourses

This was a week of records for the markets. The Bombay Stock Exchange Sensex after falling 330 points on May 14, plunged by 842 points to an intra-day low of 4227.50 points on Monday before recovering some territory to close at 4505.16.

The benchmark Sensex fell 2.14 per cent this week over last Friday's close. The broader National Stock Exchange (NSE) Nifty lost 1.40 per cent.

The BSE PSU index and the Bankex were the only sectoral gainers for the week, rising by 0.83 per cent and 1.57 per cent, respectively.

The political spectacle contributed to much of the volatility, though margin calls played their role in eroding confidence and market capitalisation simultaneously.

The BSE's market capitalisation has fallen by Rs 18,003 crore in the last one week and many a small investor has lost his shirt.

The volatility wiped out most of his gains in the last one year. After small and leveraged investors lost their money and confidence, the Sensex recovered to pierce 5000 by mid-week.

Rumours of a payment crisis were denied by the Securities and Exchange Board of India (Sebi), which also said that the financial markets were safe.

The regulator had convened a meeting on Tuesday to review settlement and risk management issues and found nothing amiss.

But talks of broker terminals' being unplugged over margin issues persisted through the week.

The NSE finally issued a statement on Friday saying reports that the fall of May 17 was triggered by margin sale by it were incorrect.

The press release clarified that the clearing corporation did not make any sales in any of the markets on Monday on its own behalf as a risk containment measure.

It said no security held as margin by the clearing corporation was liquidated on May 17, in the equity or derivatives segments.

So what is ahead? Brokers and fund managers say this is the time to stay invested, "but do realign your portfolios".

Shashi Krishnan, CEO, Cholamandamam Mutual Fund, said: "The biggest worry was lack of clarity on certain economic issues and political uncertainty. Many of the concerns have now been addressed and this should lend stability to the markets."