Why panic?

The sensex fell 300 points on 12th April and another 100 points on 13th April ... and people are saying all kinds of things. Some important facts -
> the market has gone down by just 3.44% over the last two days. This is much better than those days when some of our stocks have gone down by 10% or more.
> a 400 pt drop reduces the current sensex P/E by almost hundred bps. So this should be at 19, right?
> corporate profits have improved over time ... nothing drastic has happened in terms of reduced exports, still higher fuel prices (it's remained the same over the last three quarters), global downturn. Infact exports have jumped, global economy is also on a high, real estate, gold prices and commodities are increasing .. things are getting better. Now an improvement in corporate earnings by 10%, would result in a reduction of PE by 180 bps. So your PE will go down to 17.20. If corp earnings is up 15%, then PE is 16.35.

It's my opinion, that the market will be upto 12000 by the end of May. Watch !!!!