When everyone thought that the Sensex had met its nadir in the form of 'Manic Monday' of May 22, in came June 7 and the BSE Sensex breached those Monday lows and closed at 9,756. Down 70 points from the lows recorded on the Black Monday.

Just as when no one was able to predict the peak for the markets, when it was going up, no one is willing to predict its bottom now. Ebbed sentiments are forbidding buying at lower levels.

Though the FIIs have had their contribution in helping the Sensex scale new highs, the contribution of the MFs was equally important. The role played by the MFs in fuelling the Sensex march could be gauged by the fact that as and when the FIIs turned negative and became sellers, the MFs propped up the markets by turning buyers.

So what has changed now? The ongoing correction is being seen as a part of global phenomenon. A phenomenon, which has seen the indices of all the important markets taking a big nose-dive.

In the last one week, Brazil's market has lost 3.5 per cent. Russia has lost 5.5 per cent. The loss in Mexico was of 1.5 per cent. In the Asian markets, Thailand has lost 5 per cent, Korea has lost 7 per cent, Taiwan has lost 7.8 per cent. The Nikkei has shed 5.6 per cent; Singapore has lost 2.5 per cent. The markets in Philippines have corrected by 9 per cent.

So clearly, there has been a global meltdown and the Indian markets are also smarting under its impact. So will the Indian market shore up, if the global factors improve?

There is unanimity in the market voices emanating both from India and abroad about the fundamentals of India story. If the corporate numbers were not enough, the GDP figures only reinforced this confidence. Granted, there are concerns about the current account deficit. But this element pales in comparison to the inherent positives of the India story.

"The churning taking place in the global equity market has its roots mainly in the concerns over liquidity and interest rates. Fundamentally, the India story is still intact," says market analyst Gul Tekchandani. He thinks that in the next one month the global factors should stabilise in the sense there should be more clarity about the issues that are causing jittery in the markets across the globe. This, in turn, he hopes, will positively impact on the Indian markets as well.

Investment Guru Marc Faber echoes the same sentiments. "The market in India has not peaked out for good because fundamentally, the potential of the Indian economy is very good in the long run," Faber says.

The view from Goldman Sachs is no different either. Its Michael Buchanan says, "I don't think they (emerging markets) have changed fundamentally. Our outlook for global growth is still very strong. Fundamentally, things aren't too bad."

So can we hope to soon attain the previous highs? Or, is it too early to build such castles? Cautions Tekchandani, "Markets are not pure science. They work as much on sentiments as they do on fundamentals."

Illustrating his point, he says that the market "kept going up amidst all sound and fury over steep valuations. And now that it has come down and when valuations are attractive across the board, the buying is not coming in".

He thinks that it will be a while before market can attain its earlier levels, as it will take time for the investors to forget everything that has happened in the last fortnight and start reinvesting with old vigour and enthusiasm. In the short-term, he feels the market will see the influx of only smart money.

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