The wait for 16,000 on the Street has just got longer. After an unrelenting rally for several sessions, the Bombay Stock Exchange (BSE) Sensex finally tumbled nearly 6 per cent on Friday.
Analysts expect much more volatility ahead as investors curtail purchases and prefer to sit on cash.
"The correction is not yet complete. It may continue for a few more sessions," said Dinesh Thakkar, CMD of Angel Broking.
Friday's downturn was steep, but market watchers do not anticipate a turnaround soon.
With world markets reeling under the subprime mortgage trouble in the US, industry observers see no respite.
"Sub-prime mortgage troubles may worsen, with worries spreading to investors holding securities backed by these mortgages. The appearance of drying up of liquidity for private-equity acquisitions could potentially deal a blow to LBO funds whose recent deal activities have been a major source of support for the equity market in the US," said Sandeep Sharma, Head - Private Banking, India, Societe Generale Private Banking India.
Markets will stabilise after a few sessions and strong fundamentals will support prices, say analysts. Investors should follow a strategy of selecting a good portfolio of 20-20 large cap stocks as volatility is here to say, added Thakkar.
"The domestic consumption led economy with strong consumer demand and spend on infrastructure will lead to 15-20 per cent corporate earning growth and markets will follow on over the next 2-3 years," said Sharma.