Let me start by stating that I don't believe that fundamentals drive markets. I firmly believe that its collective human greed and fear which is primary driver for any asset price. In summary its humans greed and fear which lead to various bubbles and following bursts. Every move to bubble heights is then followed by years of digesting the excesses.
Below is chart of 1991-1999 chart, as you can see that following the bubble move in 1992, was followed by vicious bear market. There was another attempt by early 1994 at old highs. This was followed by almost four years of market wilderness before tech bubble took roots. Does the chart ring any bells :).....Well don't be surprised as these moves get repeated in every kind of asset class.
Cut to present day Indian markets and we can see that we are in the wilderness zone, which will frustrate a majority before building the base for next bubble. If you believe in fractals then we shouldn't bottom before Mid-2013.
All the stories of cultural revolution in ME, bankers manipulating in EU and US, regulators screwing up industries in India are all part of excuses for the markets to spend the time needed to digest past excesses.
One rule is absolutely true "Nominal" equity prices only move in one direction over long term, that's upwards.
From short-term trading point of view, it seems 10-15% kind of bounce from here wouldn't surprise me but might surprise lot of other people:)