Price is the intersection of supply and demand. In financial markets, law of supply and demand is determined by the flow of trading capital. It is trading capital that pushes a market one way or another. An oversupply or imbalance of buy orders will push the market up. An oversupply of sell orders will push the market lower. When there is a large demand for a stock, price goes up; and when there is large supply of a stock, the price goes down. Trading is purely price-based; and closely follows supply demand principle. Simple, right, but we always ignore this fact; by thinking we are smarter than market. Cement has been one of the darlings of market pundits in last 2-3 years. It has been a play on infrastructure spending. The price of cement has been hitting the roof. The Net Profit has been growing exponentially for all the cement companies. As a result, in last couple of years, all cement companies have entered portfolios of all leading financial investors. I would not be wrong in stating that it has been one of the well owned sectors in portfolios. All the good news was in the price. Then, around Jan 23-24, Government came out with a diktat on duty cuts on import of cement products. The news was more of a signal that Government is not going to tolerate unrelenting rise in prices of cement; and is serious about inflation control. Lot of people trashed the move stating that this move means nothing. But there is a saying you should always look at what investors/traders are doing rather than thinking/saying. Cement stocks witnessed huge selling on the day of announcement. Lot of analysts came on TV, thinking they are smarter than market, and shared their wisdom - "There is no change in fundamentals, and they will be buyers on the fall". Mistake - They ignored the fact that cement is heavily owned sector in large number of portfolios and even small unwinding can dampen the sentiment. This was a transition point when supply started overpowering demand. Lesson – Momentum always feeds momentum and the danger, of course, is that this works both ways. Good times tend to make us forget about those kind of markets. Stocks go down, and then continue to go down. History teaches us that "what goes up must come down". Supply catches up with demand.