As reported earlier that the move of Stock Market Watchdog SEBI to curb stock market rise by hot-money invested by some FIIs, the stock markets have reacted very badly to the news. SEBI proposed a ban on P-Notes after the recent rally in stock markets. FIIs investments through P-Notes accounts for nearly 51% of their total investment as per the August 2007 records. The Stock markets opened with a huge gap and immediately went down to touch the lowest level of 5107 for NSE Nifty.

The trading of Stocks at Stock markets was halted after a sharp downfall. The markets opened again after one hour. Bombay Stock Exchange Sensex was down by nearly 8% with a loss of over 1500 points. This is the biggest ever intra-day fall for Indian Stock markets. The markets were closed for one hour soon after the trading started.

The markets have now recovered a bit from earlier losses. The stock market analysts believe that the selling pressure may continue as the P-Notes is the main entry route for many FII investments in stock markets. SEBI’s move to ban P-Notes is not a good thing for the booming Indian Stock Markets. The markets may see a correction of 2000 points from its current levels.

At 11.30 am, NSE Nifty was down by 315 points with a loss of nearly 5.57%. NSE NIFTY is currently at 5354.