A man walks past the Bombay Stock Exchange (BSE) building in Mumbai December 5, 2013.Reuters

The recent volatile trading sessions seen in domestic stock markets have left investors confused over the future direction of the markets; however, many analysts see more downside for the equity markets citing a delayed monsoon rainfall and rising crude oil prices in the international markets.

The benchmark BSE Sensex plunged 470 points or 1.75% on Thursday to close at 26,370.98 points, erasing all the gains it witnessed in the previous session. The Nifty index was down 2% to close at 7,965, breaking the psychologically important level of 8,000 for the first time in more than seven months.

"People who were holding on to their stock so far and were not selling till now will sell their stocks to book profit once 8,000 is broken. It is possible that we can see levels of 7,800 over the next few days," an Independent analyst Ambareesh Baliga told NDTV Profit.

Sectors such as auto, banking, capital goods, consumer durables, power, realty, IT and oil & gas indices were down in a range of 1.3-2.4% on the Bombay Stock Exchange (BSE). Tata Power was the biggest Nifty loser, down 5.2% to close at Rs 70.

Idea Cellular, Asian Paints, Kotak Mahindra Bank, Bosch, Punjab National Bank, UltraTech Cements and Tata Motors were the other major losers falling by 3.6%-4.5%.

Analysts said that delay in monsoon rainfall is the main concern for the market besides rising international crude oil prices. The outcome of monsoon remains important for the Reserve Bank of India (RBI) to ease policy rates further.

A second year of deficient monsoon rainfall will severely affect the agricultural sector, bringing down the output and rising food prices. A rise in inflation will curtail the prospects of further rate cuts by the central bank.

Indian companies are hungry for funds and a delay in liquidity injection into the system would undermine the investment plans of the companies.

A rebounce in crude oil prices by nearly 50% is expected to hurt the external balances of the nation. India's current account deficit has been steadily falling in recent months on the back of a plunge in crude oil prices due to oversupply concerns.

The recent spike in oil prices is likely to push the inflation rates up, making the central bank to remain on hold for long.

Besides, slow pace of reforms by the Modi government is dampening the sentiment of foreign investors, who have been offloading their shares at an aggressive pace in the recent past.

A weak monsoon is expected to put further pressure on the passing of crucial bill like Land Acquisition bill, a bill which was delayed due to strong opposition in the Parliament.