Kuldeep, here is an attachment on correlation of Indian markets with other world markets. The graph has 4 other indices, dow jones, dax, ftse and Hong Kong. As you can see, the direction of the movement in Indian market is same as in other markets. But the extent of movement is much higher. This only compares from Jan 2009. If you look at the previous data, the same trend is there. When world markets were tanking, Indian market was tanking much more.
My opinion always gets butchered...

. Last time, in April, when Sensex was at 10k or so, I said that the market shouldn't rally. It should either stagnate or maybe go even lower. But it rallied big time. I still don't see any reason for it to have rallied. The world economy is still in deep sh*t. The market just lapped on to whatever little good news it saw and ignored all the bad news. I think it should tank and probably go below 10k before the end of this year. But yes if it touches those lows again, it is a good buy. I won't buy at current levels. It can still go 20k or beyond, if all the people continue feeling good and buying. But personally, I see a significant downside risk.