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1. Introduction to present financial market in India
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General Overview
As might be expected, the main impact of the global financial turmoil in India hasemanated from the significant change experienced in the capital account in 2008-09so far, relative to the previous year 
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.Total net capital flows fell from US$17.3 billionin April-June 2007 to US$13.2 billion in April-June 2008. While Foreign DirectInvestment (FDI) inflows have continued to exhibit accelerated growth (US$ 16.7 billion during April-August 2008 as compared with US$ 8.5 billion in thecorresponding period of 2007), portfolio investments by
 foreign institutional investors (FIIs) witnessed a net outflow of about US$ 6.4 billion in April-September 2008 as compared with a net inflow of US$ 15.5 billion in the corresponding period last year.
Similarly, external commercial borrowings of the corporate sector declined from US$7.0 billion in April-June 2007 to US$ 1.6 billion in April-June 2008, partially inresponse to policy measures in the face of excess flows in 2007-08, but also due to thecurrent turmoil in advanced economies. Whereas the real exchange rate appreciatedfrom an index of 104.9 (base 1993-94=100) (US$1 = Rs. 46.12) in September 2006 to115.0 (US$ 1 = Rs. 40.34) in September 2007, it has now depreciated to a level of 101.5 (US $ 1 = Rs. 48.74) as on October 8, 2008.
 
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 Primary Market 
Primary Market may be defined as a market for new issues.
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The primary market isthe pacesetter for mobilizing resources by corporates.
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The bull-run in the secondarymarket enabled and emboldened companies to enter the market with big issues andattract investors and traders to invest in public issues to reap high profits followingtheir listing.The companies profitability performance was also good. The market, however,underwent turmoil as soon as an FII-driven crisis developed in the secondary marketand the mega crash occurred in January second week 
 Presently, the primary market is in a bearish mood and this can be seen from theway the issues of Wockhardt Hospital and Emaar MGF have gone.
There are two factors for this depressing outlook 
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Continuing uncertainties; and 
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 Further crash of the stock prices and hesitation on the part of investors due to fall in shares of Reliance Power as soon as they were listed. Investors lost nearly Rs 70 per share on listing of Reliance Power.
Only 19 companies have entered the capital market in the current financial year so far,mobilizing Rs 1,968 crore, the lowest since 2003-04. Interestingly, of these 19 publicoffers, only four are trading above the issue prices while 13 are trading at discounts.Two are not yet listed. IPO investors have become cautious as 70 per cent publicoffers made last financial year are currently trading at a discount.Following this poor show of public offers and a slippery secondary market, severalIndian promoters have withdrawn their plans to raise funds through public offers. TheSecurities and Exchange Board of India (Sebi) data show that 24 promoters, whowere planning to raise Rs 21,300 crore, have either put their plans on hold or havewithdrawn their offer documents after submitting the red-herring prospectus.
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According to Prime Database, four companies, collectively planning to raise Rs 4,517crore, have withdrawn their offer documents since April 2008. This includes JSWEnergy (Rs 4,000 crore), RNS Infrastructure (Rs 300 crore), Cellebrum Technologies(Rs 200 crore) and Elysium Pharmaceuticals (Rs 17 crore).Many real estate and financial services sector companies have postponed or cancelledtheir IPO plans after stocks from these sectors reported more than 50 per cent erosionin their market value. Promoters of Emaar MGF Land, Wockhardt Hospitals andSVEC Constructions pulled out their IPOs, amounting to Rs 1,317 crore, due to lowresponse from retail investors. There are over 100 companies such as Essar Power,GMR Energy, ICICI Securities, Lodha Builders, Sterlite Energy and SRL Ranbaxy,which had announced their IPO intentions but have now stalled their plans.
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Secondary Market 
The sensex climbed at a rapid rate, touching record heights in 2007 -2008. Theaverage Indian investor who traditionally has been a very conservative investor  became more confident and started investing heavily inthe stock market. The stock market grew in leaps and bounds and its growth inthe last five yearsitself has been a phenomenal twenty five per cent.The BSE Sensex increased significantly from a level of 13,072 as at end-March 2007to its peak of 20,873 on January 8, 2008 in the presence of heavy portfolio flowsresponding to the high growth performance of the Indian corporate sector. With portfolio flows reversing in 2008, partly because of the international market turmoil,the Sensex has now dropped to a level of 11,328 on October 8, 2008, in line withsimilar large declines in other major stock markets.Against this backdrop the unthinkable happened, the stock market Of theUnited states of Americaor Wall street stock exchange crashed due to a crisis in the housingfinance sector of its leading banks, caused due to delinquency and non-repayment of housing loans. This resulted in a panic in the world market including India. TheForeign Investment also came down heavily due to a liquidity crunch in the major companies. The banks stopped lending to the bankers and in effect the market came toa sudden stop. The Indian investor panicked again and started selling like crazy.
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