Can't the Government do anything to stop this crash?

The market seems to be having a free fall despite a slew of measures. The sensex has taken a dive from 13500 to touch 8000 in october 2008 as if panic button has been kept continuously on. FIIS play havoc with our market and make a kill taking the market up and down and dictating terms and creating helpless situation. To counter the FIIS move,it is better for banks, insurance companies and mutual funds to enter the market with Government's guarantee. As it is, banks are allowed to have capital market exposure upto 5 % of their net worth. Most of the banks have not gone for this as a matter of abundant precaution and prudence. Banks having capital adequacy ratio of 12% and above ,NPA level less than 1%, and having no exposure to real estate and capital market exposure of less than 5% can be made to enter the market in a caliberated manner and boost the market sentiments and confidence. Since the sensex has fallen drastically despite fundamentals of our economy remain strong, finacial and banking system remain largely insulated from global crisis and claim to be resilient to absorb the shocks there is nothing wrong if banks are allowed to increase their capital market exposure a bit . There is no serious downside risk and and at the same time banks can think of improving their trading profit . What the markets want now is the confidence level and this can be achieved only by making institutions to enter the market. Even strong mutual funds having good financials and insurance companies with sound business base can enter the market with a guarantee from the Government. The cost is only notional and the benefit is substantial.
Even investments by retailers upto Rs 1 lakh in capital market can be considered for tax concession if not exemption. Of course risks have to be borne by them. We are facing an unusual situation and nothing wrong if we take some unusual measures.
The cost incurred by the Government will be more than offset by the direct and indirect gains.