Why is market falling so much?

Just as the markets were going up for no “particular reason” for the last 2-3 months,the same way they are coming down for no “specific reason”.

“Greed” and “fear” are the only things which can explain these moves. In my earlier post, I had written about a bubble being built in many of the stocks(greed) and today was the day when that bubble finally decided to burst(fear).

This correction might turn out to be similar to the one we had in May 2006 especially in the small cap/midcap stocks. One must be prepared for a 50-80% erosion in value of many stocks.

Technically- 5000 is one important level that needs to be watched out. Below that a slide to 4500 cannot be ruled out. In short term, a bounce to 5400-5500 is not ruled out.

At the same time, I am not seeing any evidence of strong buying at lower levels. Neither did I see it today nor did I see it on Friday. FIIs are in a mess because of subprime issues, so they have no option but to sell their EM positions.

All what might happen is-exit on rise!

Things shall eventually settle down but its difficult to say as to how long will it take.

I feel that we need to be mentally prepared for difficult times ahead. We need to be patient and be ready with our strategy.