Is everything okay with the economy?
The fundamentals of the Indian economy are still very strong. Some analysts say that business environment is good, but corporate earnings are not as good as they wree last year.
Will foreign investors sell more stocks?
Market expectations are that foreign investors would continue to sell.
With FIIs turning sellers on the domestic bourses, it is likely that domestic mutual funds might step in and buy equity thereby preventing a further fall. However, it remains to be seen if this would happen.
What should traders do now?
"If you have the money it's a great time to buy into this market," said Ambareesh Baliga of Karvy Stock Broking on NDTV Profit. There is no fundamental reason for this massive fall in the market and its been all about margin calls, he added.
Given the rise in volatility, it may not be advisable to trade in stocks that lack liquidity. Trading in stocks, which do not find presence in the derivatives segment may be dangerous.
The reason is simple: derivatives give you an option to hedge your position, limiting your losses, in case the market goes against you.
Keep your trading positions about 30 per cent lower than what you can actually afford. This would greatly help in avoiding distress sale in case the regulators slap additional margins. For an investor, leveraged positions are completely avoidable.
Stock market traders and investors panicked on Monday as the Indian markets crashed.
Photograph: Indranil Mukherjee/AFP/Getty Imagess
Also read: The Sensex story: From 1K to 20K
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