Sensex crash: SEBI initiates probe, while some retail investors appear to be back !

SEBI is said to be probing the role of various parties, especially top foreign portfolio investors, in the Sensex collapse of 17 October 2007. The stock market (BSE) crashed by 1700 points within minutes of market opening on the back of relatively small volumes. The regulator seems to suspect that trades may have been done at way off market prices with some of the same investors coming in to buy securities at lower prices when markets reopened after the hour trade was halted for. Issuers of Participatory Notes (PN) seem to be under scrutiny.

Meanwhile, some reports suggest that retail investors did not appear to be hurt very badly in the Sensex crash as many may have booked profits at the high levels. Dealers also feel that investors were hurt more by the US subprime led stock market fall in August than this particular crash. In fact, BSE data seems to suggest that retail investors may have bought Rs 1871.22 crores in last three trading sessions end of last week.

It remains anyone's guess how all this will play out in the short term. Volatility can create both significant gain and severe pain - all depends on your risk appetite !