This year's biggest drop came today with sensex taking cut of more than 400 points and Dow index following the lead from ASIA with slide of 100 points. What's happening .. sudden change in course where is it coming from ?

1. china asset bubble

Finally chinese are realizing that there is an asset bubble and to stop that they need to curb credit. That means banks lending will be lower, rates will be higher. Read economist artcile here .

2. Inflation
What we see here in India is reflected in china as well . Food prices jumping and inflation is making living difficult to poor people. That means they need to persuade people to consume less, or reduce liquidity in system.

3.  Mr Obama affect
Banks need to act in manners. More regulations for banks.

Does it mean we are headed for long downturn ?  I don't think so . While chinese govt can reduce credit they need to make sure that economy doesn't get into grip of slowdown again. I think they will take baby steps and no drastic cuts.

What about India ? Inflation is visible everywhere in India. Things are expensive. Specially food prices needs to be curbed.  Does it mean raising rates .. may be. Or import more food from world.

What to avoid ?  As I said earlier Banking and realty should be avoided at all cost. Companies with high debt load will have to more in interest and hence less net income.

Opportunities..

I think media and IT are good opportunities. Some engineering companies are good as well.