How exactly can this be done is the question when the once bitten twice shy investor has fled the market and the government, in its sleepy way, is bringing in one measure after the other for the revival of these markets.

In the capital market, the secondary and primary markets are intertwined and with long-term players currently out of the fray, the markets are in for a roller-coaster ride.

"The long-term players in the market are domestic mutual funds and the foreign institutional investors (FIIs) in the absence of whom the market is left with short-term players that is, the speculators," said fund manager at Mafatlal Asset Management, BG Shetge.

The FIIs get country allocations in Januaryeach year (the first quarter of the year) and they invest the entire portion allocated for the country. For example, if the total allocation earmarked for India is Rs 3,000 to Rs 4,000 crore, the FIIs will come and invest in the first quarter of the year.

At this time the FIIs are in a buy mode. So, there should be someone wiling to sell. And that support can only be provided by domestic mutual funds. When this happens, the market is bound to shoot up.

"The first quarter of the year is also the time for Indian mutual funds to sell and book profits as the financial year ending for the Indian mutual funds is in March," said Shetge.

"Towards the end of the year -- September to December -- the FIIs like to sell as they have to book profits for the year. This is the time for Indian investors to invest as the harvest funds are just beginning to flow into the economic system," said Shetge.

Also, Indians are in a mood to invest post-diwali. The domestic mutual funds can collect this money and invest the samein the market. So, when the FIIs are in a mood to sell there should be mutual funds willing to buy to create a proper balance in the market.

"Thus, long-term players in the market with less speculators would lead to less volatility and speculation in the market. "In such a case brokers can also play a constructive role. Whilst in the first quarter they can do warehousing of shares, they can sell it when FIIs come to them," said the managing director of a mutual fund.

In the US, the land of mutual funds, all the funds together collect around Rs 4,000 crore ($1 billion) each day and the US banks also garner the same amount of money each day. In India, the total banking system on an average garners close to Rs 100 crore daily and if the mutual funds can garner even half the amount ie, Rs 50 crore on a daily basis, it would lead to a situation where the funds will become a power to reckon with with an yearly input of around Rs 18,250 crore. And if 60 per cent of this money finds its way into the equitymarkets, it will provide a tremendous boost to the market.

"The government can bring back the investor by offering PSU shares at a discount of say 5 per cent to the market price which will definitely be mopped up by the public. This they can manage by earmarking 2 to 3 per cent of their equity divestment for public," said Ajay S Doshi, a BSE broker.

"Today the amount of money that domestic mutual funds have compared to FIIs is insignificant (excluding UTI). This balancing act is not provided by them today but it can take place in a few years from now," said the president of Twentieth Century Mutual Fund, VR Deshpande.