Once again on Wednesday, there was a lesson for all who think that bull markets don't see volatility. All of sudden there was a sharp dip in Nifty and other broader market indices, except bank nifty which was trading in green thanks to the fact its largest constituent HDFC bank was trading in green. When valuations are high, volatility never gives notice before coming so one should always be prepared for it. Another point to be watched, if the frequency of the volatile phase increases and if it starts to happen every other fortnight, it might be an indication of profit booking. There is a possibility that as markets inch higher on index levels, there is some sort of rotational profit booking happening. So, it would be better to stay prepared for volatility. Another reason for staying with large caps is that valuations are high in large part of the mid and small caps and they are the ones which might lose more weight if there is any correction due to global reasons.
