It’s been a volatile week in the markets. The India VIX shot up to a level of 18 this week from the low of 10 last month. Pre-election volatility is nothing new. And volatility may be here to stay. It’s time for investors to think about how they want to respond to volatility.
Market sentiments respond swiftly to the news, both positive and negative. The pre-election period will be filled with news at a time when sentiments are running high. The unprepared or under-prepared investors can find themselves caught on the wrong side of the volatility wave.
Volatility is unpopular, but it can be a blessing in disguise for those who prepare. It is one more chance to strengthen portfolios and make them future-ready.
The most important factor is preparation. Investors must be ready with their game plan well in advance. This means that investors should know which ideas they would like to exit and which ones they would like to enter. More importantly, investors must decide where they want to wait. Waiting will be key in this market.