Normally, one-day moves of the indices should never be taken as a sign of what is in store for the market. However, there are times when even one-day moves say something about the underlying sentiment – and sentiment matters a lot. The way the indices moved on Friday indicated two things. First, going forward, strong volatility is very much on the cards. And second, the underlying bias of volatility is now bullish. So, stay bullish and be volatility-ready. Now, managing volatility can be very simple – or very complex. Keep it simple by buying good business and ignoring what is happening in the market for a few months. Or take the complex route of using derivatives instruments. The first option is better – and time-tested.
