Will weak global cues peg Indian markets back?

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other CNBC-TV18 anchors have to say Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

Trade with great amount of caution:

One should trade with very great amount of caution because two scenarios are possible; one is that the market falls maybe in this trot to 300-400 points, take support, like it has many times in the past, and then starts moving up once again and then goes on to take out 4,000 on the Nifty, 14,000 odd on the Sensex. It is entirely possible that this would be one scenario but as a trader, one needs to ensure that one should not end up on the losing side in a big way, because in May and June, a lot of people got wiped out in the market.

So at this stage, one does not want to stick one's neck out and say everything will be hunky-dory, this market has not corrected, it will not go on to correct and base every strategy on that. Even if the market were to stop falling after today, and one missed that bounce back, and the market goes onto 4,000 or more than 14,000, what would one have lost, at best money making opportunity for another 4-5%. It does not matter, what matters is whether you get wiped out if the market falls even more sharply.

So if there is a bounce at some time after the initial opening, it may not be an imprudent idea to lighten up some positions, buy some protections for oneself because if the market were to fall, even half of what it did in May and June, one would probably take it on the chin and not recover from it very easily and one would want to guard against something of that nature.

Mitigating risk is number one - this is the most important thing in this market. One does not want to lose a lot of money even if you give up a little bit of gains. One needs to approach the market with that sense right now. Nobody is saying that the uptrend is over, the market will fall 4,000 points from hereon, we do not know, we do not think so. But one should be careful because one does not know, things start with a small step and then become bigger.

And this morning, you probably need to buy protection for yourself and see where you are overleaveraged and overextended and need to cut some of those positions, you need to be on the safer side. It does not matter if you lose out little bit on the profits.