Sensex may drop another 1,000 points

Eoin Treacy, Global Strategist from Fullermoney.com, believes there is a possibility that the Indian markets may see a correction of another 1000 points. But he also asserts that this is only a medium-term correction and the long-term Bull Run for India is still on.

Treacy also believes that in the long-term, India can outperform markets like Brazil and Russia.

Excerpts from CNBC-TV18's exclusive interview with Eoin Treacy:

How have you read the corrections in the Indian markets? Can you see it bottoming out in the near term?

Considering the good moves we saw in the US markets last night, this will definitely put a bit of floor on to the market at least in the short-term. But the main thing to keep in mind, particularly for Indian market is that even though there has been this massive decline, which must have been traumatic for lot of investors, there hasn't been any fundamental change behind the Indian markets.

This is because the GDP growth is still fantastic and it has been so over the last three years. Secondly, India had good corporate earnings and has good demographics. So these are the reasons why people want to be in India for the long-term.

Even though the market went really up over the last three years and then this dramatic pull back, what is important is that this market has the potential to go up a lot more over the very long-term. But this is a medium-term

correction, so the chances of it going back up to the highs any time soon are quite unlikely.

How much lower could it get from here on?

I think another 1000 points is not out of the question. It is on its way down and not near the floor now. It could possibly fall another 1000 points, but I think that will be a very brief correction.

Do you see it recovering the highs that it has reached of above 12,600?

Absolutely, but it is not going to do that in June. I anticipate this is going through a medium-term correction, where it ranges sideways for couple of months before it gradually starts to put in higher lows and then one will get a good buying opportunity.

How do other emerging markets look to you?

I would hesitate to call Korea an emerging market that has been our favourite market over the longer-term because it has broken out of such a long base.

But because the emerging markets have been liquidity driven and we are seeing attraction of liquidity in US and Japan right now, along with a certain amount of inflation scare, a lot of these emerging markets have pulled back.

India has pulled back more because it had gone up so much. But over a very long-term, India will probably outperform markets like Brazil and Russia.

For more on trading & markets, log on to www.moneycontrol.com.