After the markets fell below 14,000, analysts were bearish on the markets. In fact, a number of analysts said they didn’t expect the market to touch 16,000 levels.

However, with the sub-prime woes in the US looking like it will get contained and with the unwinding of the yen carry trade seeming almost complete, analysts have once again turned bullish. A number of them have now toned down their caution on the markets. However, they are quick to caution that the current volatility being seen in the market would in fact continue for two to three months. The big question is, are we out of the woods yet?

Sudarshan Sukhani of Technical Trends said investors could assume that the correction is over. “4,100 is a strong support and so far as that support holds, one can assume that the correction is over. I don’t think that the volatility has ended. We are likely to see an increase in volatility. That’s going to continue for many months may be.”

The slow and steady advances that we have seen in June, July, and earlier may well be over, he said. “Within these parameters, we are probably back into the bull market while that level holds, so dips are buying opportunities,” he added.

So now that the Nifty is at 4,300 levels, is it prudent to initiate a long? Sukhani said, “For an intermediate trader, this is as good a time as any to go long and then wait for a few weeks, which is what his/her timeframe would be. However, for a short-term trader, this is not prudent. The volatility will come down, so we are likely to see big swings. A big down swings, whenever it comes, would be the right place to enter. These panics now need to be taken as buying opportunities and I think this will come in.”

Raamdeo Agrawal, MD, Motilal Oswal Securities, said we have probably seen the worst of the correction because it touched a 200 days moving average of 14,000. “So my sense is that, at least for the time being, this seems to be over,” he added.

Commenting on what investors can expect to see over the next few weeks, a rangebound market, or a market that will start trending higher for itself, Agrawal said that it’s a tough call. “But the pace and confidence at which the Chinese and Hang Seng markets are moving up, gives me a sense that probably we might see some accelerated movements in the market in the days to come,” he said.

Christope Lalo, MD, Societe Generale Asset Management, is the most bullish of the lot. He expects the Sensex to touch 20,000 in the next six months. “If you are optimistic, you can say that we are currently in this type of correction which leads us to believe that the 15% correction we’ve had in the markets in India will lead to a very strong bull run again, provided of course there is no second wave in the US that will hit the markets again. We are fairly optimistic. We can say optimistically that we will reach 18,000, if not 20,000, in the next six months,” he added.