The immediate downside for nifty is expected to be around 4,400 to 4,600 levels. But still there is a chance that the market could further go down and touch lower levels. When the volatility index is very high then the markets see sharp movements. One could expect to see around 30-40% corrections, similar to what happened in the 2003-2007 markets, driven by the global sentiments.
This time the markets are not only facing global problems but the local problems are there. A lot of problems have to be tackled and it is difficult to track what the final bottom will be for the markets. If the markets fall by 10% then the midcaps will see a correction of about 20-30% and even 40% if the situation goes worse. The bear market is almost here for a year now and the bull market corrections don’t last long.
Last week the Europeans said that they cannot rule out the Greek default and gold fell down. The gold fell down which has been a ultimate sign of risk aversion. The situation has many similarities to what the situation was in the year 2008. When the Lehman collapsed all the assets like equities and commodities sold-off which also included precious metals like gold. The same situation could be seen now. Dollar is considered to be the most preferred and convenient asset overseas, so everyone has been holding dollar and that is the reason dollar has been moving up. The current level is similar to the 2008 markets and the market could make new lows.
Bell The Bull says the markets could test new lows in the coming months