It's not just the policymakers who are concerned about the soaring oil prices in the international market, and its impact on the overall economy. The capital market is a worried lot too, and is keenly watching oil on the boil. Worse, a majority of market players seems to feel that there is more downside to the market. A snap poll of market participants -- ranging from fund managers, research heads at leading broking firms and directors of the broking houses -- conducted by The Financial Express, reveals that Indian markets have not yet bottomed out and it will take some more time for the situation to improve in the domestic market. A majority of them say the rising oil prices are the key cause for the current turmoil in the domestic market. The FE poll reveals that 58% of the participants attributed rising oil prices as the major cause for the current damage caused to the market. They said it is the most critical issue for the bourses. The second most critical factor, according to 22% of them, was the issue of rising inflation, while only 14% of them attributed the possibility of rising interest rates as a worrying factor.

Sudip Bandyopadhyay, managing director & CEO, Reliance Money said, "An improvement in the Indian equity market is possible, but subject to stabilisation of crude prices, interest rates and some kind of clarity in the prospective political situation. However, we do not expect significant improvement in the market scenario till next 6-9 months."

Ajay Bagga, CEO, Lotus AMC said, "It's difficult to predict when the situation will improve. A lot will depend on the US economy and on the global commodity prices. If the US economy holds up and commodity prices ease off, we could see some relief and flows both coming back to global and Indian markets. The Indian markets will follow global markets and foreign inflows into India will largely determine the direction the markets take".

But it's not only depressing news. The participants in the FE poll were also optimistic about the return of foreign institutional investors (FIIs) to the Indian market. It may be recalled that FIIs, who were the major drivers of the sustained boom witnessed in the Indian capital market in the last three years, have been net sellers to the tune of $4.6 billion in calendar year 2008 (CY08).