Volatility hurts!

Today was one of the most volatile days in the market. The markets did a real yo- yo during the market hours. People were finding difficult to keep their nerves. In the end bulls won by huge margin with markets closing above 5200. I am still not calling it a market top but advising clients to focus their energies on managing risk in their portfolios.

It is not usual to see giants like DLF making such huge moves.I don’t think anyone expects 10%+ moves on large caps in a single day! May be people are used to such moves having seen similar moves in RIL, Rel and Relcap. This also makes me believe that such stocks are also capable of falling 15-20% in a day. These days large caps are acquiring the characteristics of a mid cap or small cap stock!

Now this game is all about reducing your risk while enhancing your return. Remember “return” is visible but risk is “invisible”. It becomes visible only after the damage has been done!