Downturn might have started.

Outlook : Negative

With todays downmove starting it seems that this might be a precursor to the things to come. Todays trade was significant in more ways than one, as markets were not giving clear signal of its direction. However the mood was already spoiled with Satyams disclosures. I must comment that our markets were quite resilient to external factors and was taking everything in its stride till Satyam came along. The problem with Satyam is that it shakes the entire foundation of belief in stock markets, it makes it not fair for all game and people do not like that.

My only fear is that in this downmove we should not break the October lows else we might enter into a period that will take a long long time to correct. Also another point to note is that our markets are usually not favourable in the result season. With the results expected to be bad this year in any case, the markets might already have started the downturn.

So how do we trade this market. Keeping strict stoplosses does help. Buy only when you are sure that the valuations are compelling and screaming and yes keep only the quality stocks, wherein the managements are credible.