New Delhi, Feb. 24 -- Dear reader,

Last week, I wrote this was a phase when traders should focus on capital preservation and trade light. In my past articles, I have drawn your attention to extremely high volatility and a sharp fall in traded volumes. These are very challenging developments for retail traders as the price discovery mechanism gets inefficient. Low volumes result in wide bid and offer spreads. These are limit price orders of bulls and bears. Wider spreads mean higher trading costs and lower take-home profits. We saw this happen in the markets last week.

US president Donald Trump kept our markets on the edge with tariff announcements. The approaching expiry of the February derivatives contracts added to the nervousness. Tr...