In a letter addressed to the union finance minister, the JSE president, RC Goenka said that it is most amazing that the Sensex has lost around 1300 points (33 per cent) in the last three to four months as the FIIs sold shares worth Rs 1500 crore which was only 0.3 per cent of the total market capitalisation aggregating Rs 5,00,000 crore.

``It is a matter of grave concern that FIIs are able to influence to such a large extent by resorting to such small sales'', said Goenka in his letter. It would not have been possible if the UTI and the banks had played their role effectively - pumping in massive funds - to stabilise the market.

Citing an example Goenka said that in Hong Kong thegovernment had intervened by pumping in billions of dollars to negate speculative attacks on the local bourse. The role of the FIIs was thus watered down. It was the duty of the government to give support to the small investors. The market would never recover if millions of small investors were not taken care of and left in the lurch.

Talking to The Financial Express, Goenka said that the way about 75,000 NRIs had subscribed to the RIB bond issue of State Bank of India, the Indian investors should also be looked after by the government to bring about `permanent growth and stability to the market'.

Goenka said that the government should form a capital market development council on the lines of the two committees formed by the prime minister to revive the Indian economy. He added that the government should also immediately allow buy-back of shares to Indian companies as an outflow of Rs 4,500 crore was expected in the market by such a move.

By resorting to such measure the government would be alsoearn extra revenue by way of increase in the collection of excise duty on increased sales. The realisation of revenue would also be more by way of capital gains tax.

Goenka said that the continued hammering of the share prices was not a good indicator as the small investors would be further disheartened. It was time the government intervened immediately so as to restore the confidence of small investors in the capital market.