today i think we should talk about satyam saga which you had pointed out
see its complex , i do not fully understand it but the main thing is i/we generally trade the best of the best stocks , the top 200-300 stocks out of more than 6000 stocks , we do not trade penny stocks because penny stocks can and will be manipulated due to known reason of of any tom dick or harry with few crores rupees in hand can manipulate , it happens everyday i think so we wont talk about it , but since satyam was a blue chip , and it fell after the news surely , i think yes it was the news but also it was a liquid counter for sure too so after the news of company not having money in accounts all kind of rumours were there , initial reaction and pressure of selling surely made a techincal chain reaction ,because even the fundamentalist who seek value sold there stock in a panic when they came to know 6000 crores were missing from the accounts , so no one after that believed that the company and its directors have got any credibility and you dont wait to sell the stock once the credibility is gone with the wind , so yes suddenly fundamentals were gone to 0 within seconds the news came out and a chain reaction of everybody holding the stock selling and f&o selling lead to , from 190 rs to rs 6 in just 2 days .
see when we see only technical ,we are sure about the some kind of background of the company ..............that the company is not going to go bankrupt the next day we buy the stock ,but if it really happened for the people who suppose bought it just hours or minutes before the news came out then its the worst fear of an initial as well as long term investor .
there generally has to be some backing of fundamentals behind a stock before we trade it ,but after that fundamentals do not really help to make decisions and also news flow is always confusing to make sense out of it , exactly what is happening with nifty these days all media and all macros are so dull but markets wont listen made a huge "u" turn from 5100 to 6200 today , what else to make out of it ,that after the most basic necessary fundamentals that company or economy is here to stay the social mood are the driving factors
we all know that rnrl the company was initially was in joint hands of both ambanis , but after that of Anil's ....................it is still unknown that what the hell this company did in all those years when it was trading.............and in my knowledge it did nothing , it was supposed to be in natural gas business which never ever started even then the shares listed for 17 rs gone to 200+ ..................why?
because of the name behind it and faith (sentiment) behind its owners and their abilities.
i have always said sentiment drive the markets and these sentiments create patterns on the charts which are then used and understood by tools of technical analysis , natural tools
so we can see big contrast here ........1st company a blue chip suddenly fundamentals gone to almost 0 and the reaction was devastating because a big factor trust was breached
second a company with no real fundamentals no real business still gone to 17 to 200+ just on positive sentiments............a fundamentalist will not be able to trade this kind of stock only technical guys can