In a note to clients this morning UBS cautioned the FTSE 100 could slip under 5,000 points post Brexit, though could rise to up 6,800 if the country votes to remain.
The FTSE 100 last year climbed to 7,089.77 following investor hopes that interest rates would stay at record lows for longer than previously thought and relief at Greece's temporary solution to its financial crisis.
Read more: What the polls aren't telling you
UBS strategists have calculated the FTSE 100 could suffer a more than 20 per cent decline, putting it back in bear market territory that it was last in at the beginning of this year.
This week the FTSE has rebounded from under 6,000 to trade at over 6,250.
Yianos Kontopoulos at UBS wrote:
Following the risk-rally of the last few days, we believe there is significant room for downside in the event of a "Leave" vote. We estimate percentage moves in the midteens for UK and EU equities but materially smaller moves for the S&P 500 and EM equities.
Sterling is expected to come under pressure if the UK votes to leave the Union though there have been mixed predictions to how this would effect equity on the FTSE 100.
Read more: Gold transactions soar before Brexit vote
As the pound weakens many of the FTSE's biggest constituents are able to make greater profit from their operations abroad. Deutsche Bank has previously suggested UK equities could outperform European peers after a vote to leave due to the falling pound.
In FX, while the broad rebalancing of the UK current account could see EUR/GBP nearing parity, sensitivities to prediction market swings are at the moment pointing to a range of 0.87-0.90 in the event of Leave.
Elsewhere the Euro Stoxx 50 index could drop by 23 per cent in the event of Brexit, while the US S&P 500 could sink by as much as nine per cent.