What does it signify for investors when the volatility index India VIX rises once more?

This is a common occurrence leading up to elections. The VIX increased to 30 to 39 even in 2014 and 2019, according to Mehul Kothari, DVP of Technical Research at Anand Rathi Shares & Stock Brokers.

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India vix

The volatility gauge, or NSE’s India VIX index, surged as much as 16.4% to 21.49 on Monday during trading, the most recent in a string of sessions that saw such a dramatic increase. The results of the current general elections in 2024 are cited by a number of market analysts as the reason for the index’s increase.

For investors, what does the increase in the India VIX index mean? What experts say is as follows:

“This is a common occurrence leading up to elections. Even in 2014 and 2019 Mehul Kothari, DVP-Technical Research, Anand Rathi Shares & Stock Brokers, stated that the VIX increased to a range of 30 to 39.

This time, Kothari remarked, the market’s trepidation stems from a lack of trust regarding the ruling party’s seat count.

According to Anand James, Chief Market Strategist at Geojit Financial Services, VIX’s current behavior is quite similar to what happened just before the 2019 election results were announced. Additionally, the VIX spiked to 28.6 in March as the markets deviated from their peaks.”
James expressed more concerns, pointing out that VIX had been in the 20–14 area for the preceding six months, indicating that expectations for volatility had been rather high for a considerable amount of time.

James from Geojit believes a cooling-off before the outcome of the election.

By comparison, in just two weeks, the VIX has risen from record lows to above 20. Therefore, even while VIX’s recent history suggests that there is more opportunity for upward and hence volatility, the suddenness of the index’s rate of movement might cause a cooling off, possibly even before the election results, according to James.

When there is a price correction, Anand Rathi’s Kothari thinks that the increase in VIX can be a wonderful opportunity to deploy longs.

According to historical performance, the index has already dropped by over 4.2% from its peak, which presents a profitable opportunity to acquire some oversold equities, according to Kothari.

The India VIX index: what is it?

India VIX came first introduced in 2003 by the NSE. It computes the market’s volatility. When the market swings and moves up and down, the index rises. In a similar vein, the volatility index decreases with increased market stability and less volatility.

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