Bloodbath after bull run

What goes up must come down. The Sensex also couldn't defy gravity for long. No bull run is unstoppable. This is the reality of the stock market. The 30-share index, that was breaking its own record every next session, lost steam on January 29. The slide was inevitable, but market enthusiasts, particularly gullible retail investors, could not see the writing on the wall - SEBI's missive alerting brokers to collect higher margins from big clients. 

 Even Finance Minister Arun Jaitley's so-called pro-farmers' Budget failed to fire up the market sentiment. It became a free fall the next day on global cues, mainly due to the American paranoia over rising wages that could stoke inflation and invite interest rate hikes. Even in India, the Sensex had already shed 2,088 points in six consecutive sessions ahead of the RBI's monetary policy on Wednesday. The apex bank's analysis further spooked the market, which painted a grim picture of the economy and indicated impending inflationary pressures. Populist Budget announcements of raising MSPs and doubling farmers' income had been already discounted as impractical and uninspiring.

However, the worst sufferers of the current market turbulence are the  3.4 crore retail investors. Most of them had joined the bull run late in the day when stock values were quite high. Hence, they will suffer the most. But, they are not just victims of their own greed. The government's adverse investment policies are equally to blame. Safe and secured small savings schemes - public provident fund (PPF), national savings certificate (NSC) and Kisan Vikas Patra (KVP) - were consciously made unattractive after the government frequently slashed their interest rates. The real estate as an investment option has already lost its sheen. Bank deposits are worthless as they do not protect investors from the rising inflation. The demonetisation-stung nation cannot risk keeping hard-earned money idle at home. So, the booming market was only the natural choice for small investors until last month. In order to protect the gullible investors, the government need to stop manipulating interest rates of safe and secure investment options like PPF, NSCs and KVPs.