While the hapless investors watched their stock values plunging to ridiculous levels, their faith in market got another big jolt after the securities scam broke out in early nineties. This was more than enough to give a wake-up call to the highest executive of the country and the market regulator.

The steps from the government administrators were supposed to instill confidence in the markets. However, their repeated interventions do not seem to have produced the desired results and instead created further confusion among marketmen.

Nevertheless, the intention of authorities was to weed out the unscrupulous players and ensure safety of the markets. Some brokers complained that the government should have restrained itself from talking down the markets and instead it would have been desirable if it had come out with a consolidated package of measures to restore faith. Various events unfolded one after another - imposition of high additional volatility margins, the Securities Exchange Board of India's (SEBI's) probe into bear cartels and alleged pricing rigging in Global Trust Bank, the finance minister's statement in the Parliament, sacking of the Bombay Stock Exchange governing board. Above all, the market was also agog with rumours of big bull Ketan Parekh's facing a payment crisis.

Each development dampened the sentiments further and as the wealth erosion took dangerous proportions, the fear of a payment crisis loomed large on the exchanges. In order to rein in short-selling, SEBI put a high trading margin of upto 25 per cent on brokers' outstandings. The stocks were falling like ninepins and hence, brokers suffered massive losses. While they also faced the prospects of client default, the additional margins put a big burden on them.

Till March 13, the Bombay Stock Exchange (BSE) saw its market capitalisation eroding by Rs 1,47,000 crore in eight trading sessions. It all started on March 2, the Black Friday, when the BSE sensex crashed by 176 points after it had gained over 200 points in just two trading days, riding the budget wave. TMT stocks led the crash as the market was plagued by rumours that two of the biggest clients of Infosys - Nortel and Cisco - were renegotiating their deals with the company and that some big time brokers were facing a payment crisis. Mood was further dampened by profit warnings issued by Oracle, which triggered a crash at major exchanges all over the world, including Nasdaq.

SEBI tried to stop the slide by bringing all classes of investors under the purview of volatility margins and reducing the threshold limit from 80 per cent to 60 per cent. But the regulator's actions proved to be futile as the markets lost another 97 points on Monday.

Under pressure from the finance minister, SEBI initiated probe into the possibility of market manipulations by a bear cartel and put 14 entities under scrutiny.

Meanwhile, the finance minister had to face an uproar in the Parliament and the Opposition raised concerns on the safety of small investors. The minister later asked the market regulator to probe the spurt in the scrips of UTI and Global Trust Bank before the merger plan was announced.

Later, the fears of payment crisis turned out to be true when on March 6, Global Trust Bank threatened to offload broker's collateral securities. Some broker on the Calcutta Stock Exchange and Delhi Stock Exchange also defaulted in paying their positions, spreading panic in the markets.

In the wake of his alleged involvement in a bear cartel and passing on some price sensitive information to brokers, the then president of BSE, Mr Anand Rathi, tendered his resignation. This added to the uncertainties in the market leading to a crash of 175 points on March 11. The next day, the regulator showed the door to all the broker-directors and debarred Mr Rathi from trading, making the sensex shed another 114 points.

The finance minister has also announced a package to lift confidence in the market. He hinted on corporatisation of all the stock exchanges, putting 200-odd stocks in group A under rolling settlement and lending more teeth to the regulator.

After hitting a rock bottom, BSE sensex bounced back 279 points in two trading sessions on Wednesday and Thursday. The recovery has been mainly due to the fact that domestic financial institutions led by Unit Trust of India were pushed into the buying mode. Also, foreign funds were picking up select stocks. Interestingly, the market has so far ignored the political `tehelka'.