investment through PN route and its effect

In the year 2002-03 market was sluggish .The prices of many companies were reaching new lows and facing doom. Let us take an example of a mid-cap share Fedder Lloyd. It's price in this period was about Rs 4 but in 2006-07 it reached the zenith of Rs 210.What was the cause behind the sudden spurt? If we see the development through a common man's eye then we can hardly find any difference.If we go back to factual data's then there was about 10-15% growth in village and semi-urban areas while in the stock market it was 50 times rise. What is the reason behind this rise? One of the main reason is the increase in inflow of money by FII in secondary market. This vast amount of money came via PN route .But this money caused many problems like the appreciation of rupee and mingling of foreign reserves.Due to this RBI took many steps and expressed it's concern over PN route inflow. At last the finance ministry decided to curb the inflow of money through PN route. in October '07 SEBI decided to stop further inflow of money through PN route and also advised FII and hedge funds to withdraw their PN route investments within 15 months.
After this announcement market reacted vigorously and their was blood bath but after every blood bath rescue measures starts by market regulators and finance ministry.This time also their was a same repetition.Indian people have short memory.They forget everything after month or two.Again the analysts show the virtual reality of Indian growth story with their lucrative statistical data's. History repeats itself . Again there was rise in stock price .on 10 Jan 2008 nifty was gyrating at 6357 and our beloved sensex 21206.At this heyday [zenith] big operators get chance to exit. This time also happened the same thing.
We all know the fact that within 15 months all investments through PN route is going to be liquidated. Then why are we becoming so much bullish in the market. we should invest after contemplating seriously. I f we see it with a pessimistic view then nifty has the potential to go down to 2600-3000. But don't get worried . This will not happen overnight. after many troughs and crests ,this will happen.we should also keep pace with shrewd FII.then we indians can make money in capital market. we should never buy at bouncy and never sell at panic.The investment coming through PN route will show it's consequences till Dec'08. At every apex hedge fund are waiting to liquidate their positions . So we Indians should remain cautious.