The markets are nearing the bottom and the worst will be over soon. That's the overwhelming mood among a range of brokers, research analysts and fund managers, according to a poll conducted by Business Standard on a day the Bombay Stock Exchange's benchmark Sensex shed 499 points to close below 13,000.

Over 90 per cent of the 25 market participants in this dip-stick survey said the immediate bottom could come between 12,500 and 12,700 for the Bombay Stock Exchange Sensitive Index and 3,600 and 3,800 for the National Stock Exchange's Nifty.

Most respondents believed crude oil prices, which have risen 38 per cent between April and June, the biggest quarterly increase in nine years, and India's political stability will determine the course of the markets.

Most brokers felt that the valuations of many stocks have dropped to levels seen after the dotcom crash in 2001. This could attract some buying from foreign institutional investors (FIIs). They also expect crude oil prices to cool soon.

"There has been a crisis of confidence," said Motilal Oswal, chairman, Motilal Oswal Financial Services. Oswal, however, felt that the market is close to the bottom and investors should look for buying opportunities.

Jignesh Desai, who heads institutional broking at SBI [Get Quote] Capital Market, said, "The market looks in oversold territory as most negative news flows have been discounted -- a view shared by Lalit Thakkar, Director-Research, at Angel Broking.

India's markets, in line with global markets, have been falling since January, when the crisis in the sub-prime or high-risk home loan market in the US saw significant write-downs by major US investment banks, causing foreign investors to pull back commitments to emerging markets in particular.

More negative news, such as steadily rising domestic and global inflation on the back of sharp rises in crude, commodities and food prices, has taken its toll since. On Tuesday, the benchmark indices closed at their lowest levels since April 2007.

For investors, 2008 is proving a nightmare so far. In sharp contrast to calendar 2007, when the Sensex rose a dizzying 6,500.08 points or 47.15 per cent, from 13,786.91 to 20,286.99, the benchmark index has dropped 7,325.31 points, or 36.11 per cent, since January, wiping out Rs 30,06,350 crore in market capitalisation.

Nilesh Shah, deputy MD, ICICI [Get Quote] Prudential Asset Management Company, said record high crude oil prices are the biggest factor for the market fall in recent months.

"FIIs are selling because higher crude oil prices pose a threat to inflation stability and the fiscal deficit. The market will bottom out when there is evidence that crude oil prices have reached their peak and are expected to come down," he added.

Manish Sonthalia of Motilal Oswal said the market is waiting for one positive trigger and this could push the Sensex up by 10 per cent.

Some respondents, however, still feel that the market has not bottomed out. A large foreign research house said the fall in the last 10 sessions is unprecedented on the back of heavy FII selling. "It's difficult to pinpoint a bottom level," he said.

Kamlesh Kotak, VP (Research) at Asian Market Securities, said the major reason the market is falling is the uncertainty surrounding the stability of the government. The United Progressive Alliance is facing pressure from the four left parties that support it in Parliament to jettison the Indo-US civil nuclear deal, raising fears of an early general election.

Kotak feels market may go below 11,000 before bottoming out.

Nirmal Jain, CMD, India Infoline [Get Quote] adds: "Sentiment is very bad in India and this may lead the Sensex to touch 12,000. In the worst-case scenario, it may go even below that."