Udayan's response to readers' queries on IBNLive

HIS VIEW: Udayan Mukherjee says there is no scam in the Indian market in the current situation.

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Keywords: Indian stock market, market meltdown

These are difficult days for the market. The pain is not just in the US or Asia, but across all markets — in particular, all emerging markets have been feeling the tremors of what is being called the Big Market Meltdown.

Billionaire investor George Soros called it the worst financial crisis on earth since World War II. Union Finance Minister P Chidambaram, on the other hand, feels Indian markets should be relatively free from the worries of the West.

What triggered the market meltdown in India, then? Is it only the global cues, or is there more to it? IBNLive readers posed many questions like this to eminent Market Analyst and CNBC-TV18's Executive Editor Udayan Mukherjee. Here is how Udayan responded to these questions.

Vishal Gandhi: Sir, it's really surprising that in 10 trading session we have given out the gains of last 100 trading sessions. We are at the lows where we were at around 2004. Fed has cut the rates by 75Bps points whihc is biggest after 1991, still the US markets are falling.

Fed has cut the rates, the Indian story is Intact, SBI might reduce intrest rates, stocks are at cheap valuations - all these conditoins are in favour of market and still it's volatile. So what's exactly is this? Are we looking for another Harshad Mehta or Ketan Parkeh era or it's just that market is realy bothered about fundamentals?

Udayan Mukherjee: There is no scam in the Indian market which is driving stocks down. This is not a Ketan Parekh/Harshad Mehta kind of fall at all. Sure, excesses happened in the futures market but that is not the same thing as the entire market being rigged up by operators.

Global fears have pricked the local overexuberance that was visible over the last couple of months. This was overdue and the markets will be healthier in the longer term on account of this purging. Don't panic.

Pavan Peri, Mandavelli, Chennai: I just wanted to ask you, with such a huge crash in a few days, will the stock market be able to get the boom that was expected to happen at the end of the year (reaching 25000 mark)? One more thing, why can't India escape from the clucthes of this foreign influence?

Udayan Mukherjee: We live in a global village today and it's very difficult to completely ignore what's going on in other financial markets. After all, the same pool of money sloshes around in all these markets.

A global meltdown affects sentiment and liquidity flows even if they don't alter the fundamental picture of our economy. Keep the faith, it is entirely possible that the market climbs to the levels you are talking about by the end of the year.