The rupee’s free fall over the last few weeks and the stock market crash on Tuesday has left investors and stock brokers a worried lot.
Comparisons are being drawn with the crisis in 2008, when the global downturn had bled financial markets.
“While the 2008 crisis was due to global factors, the current situation has arisen due to the government’s faulty financial policies. The economic crisis we are seeing today has not happened overnight. There were several alarms over the last two years, but the government did not act on them,” said Milind Choksi, 33, a stock market investor based in Borivli.
“I have suffered heavy losses on my investments in the banking and mining sector,” he said.
“But I could balance them with profits from my investments in gold.”
Explaining the magnitude of the crisis, Girish Bhutra, a stock-broker from Nariman Point, said: “The confidence in the stock market has been completely shaken, with stocks selling at 50% lower than their original value. With i nvestors suffering losses, brokerage revenue has also come down to 0.10% of the value of the transaction, from 0.50% a few months ago.”
Stock market investors are now looking to change their portfolios to survive the crisis, while brokerage firms are adopting stringent cost-cutting measures to stay afloat.
The food security bill passed by Lok Sabha on Monday has added to the woes of the financial sector.
“With the passing of the bill, the huge fiscal deficit in the country has become a cause of concern for foreign institutional investors (FIIs), who play a major role in the capital markets,” said Bhutra.
A stockbroker said, “The financial market has become so volatile today that only 10% of business volume comes from genuine investors, while 90% is from speculative, high-frequency traders.”