Blog |

Characteristic of the index as it is so named the VIX (India Volatility Index) had a sharp rise in the past week. The volatility index has put doubts into the minds of stock market observers whether the India VIX Index rally is a signal of a rising tide against the BJP’s victory in the Lok Sabha elections. Some market observers believe that rising India VIX Index doesn’t mean a fear of BJP’s loss of majority but a lower than the claimed number of seats by the BJP and its allies.

It is pertinent to note however that the India VIX Index’s current movement is not unique to this election cycle. It can be recalled that the India VIX had surged to a high of 39.30 during the 2014 Lok Sabha elections and nearly touched the 30 mark during the 2019 Lok Sabha polls.

It may be helpful to understand what constitutes the index in the first place. The website clarifies “Volatility Index is a measure, of the amount by which an underlying Index is expected to fluctuate, in the near term, (calculated as annualised volatility, denoted in percentage e.g. 20%) based on the order book of the underlying index options.

India VIX is a volatility index based on the NIFTY Index Option prices. From the best bid-ask prices of NIFTY Options contracts, a volatility figure (%) is calculated which indicates the expected market volatility over the next 30 calendar days.

Thus the VIX is an indicator of sentiment among the option markets participants and their positioning in anticipation of events. Should this be the only measure to understand market sentiments? While it may not be definitive one can take that as one of the indicators of market skittishness.

Focus on the long term

The host of events in the global geo political environment, continuing uncertainty regarding a “soft landing” in the US and worries of market valuation remains a continuing feature in markets globally.

Markets remain in this state for most of the times and periods of clarity and calm are few and far between. Expect markets to continue to fluctuate but do not lose focus on the long term. India continues to offer a great opportunity for long term investors in its equity markets however success will be determined by which investors remain steadfast in their asset allocation and refuse to be swayed by interim volatility as either defined by the VIX or otherwise and the investors who are swayed by interim volatility and events.

Mr. Tushar Pradhan
Chief mentor, Investment Strategy

Disclaimer: This newsletter is being curated by HXGON Partners LLP, a knowledge partner of Epsilon Money. This newsletter is not intended to be used as a recommendation and is generic in nature. Investors should follow the advice of a qualified investment advisor before making any investment decisions and should read all investment related documents and risk disclosures.
Epsilon Money Mart Pvt Ltd (Epsilon Money) having its registered office in Mumbai, Maharashtra India, is an AMFI registered Mutual Fund distributor and IRDAI registered Corporate Agent and associated with SMC Global Securities Limited as a Sub-Broker for investments opportunities in Direct Equities. Epsilon Money acts as a referrer to the Product and Services Providers who have obtained the required license to offer a suite of wealth management products which may not be directly offered by it. Epsilon money does not guarantee the validity/compliance of license of Product and Services Providers. Clients may conduct their independent due diligence before investing. The insurance products offered are underwritten by the respective Insurance Partners only. Epsilon Money does not underwrite the risk or act as an Insurer. Mutual Fund investments are subject to market risks. Please read all the offer-related documents carefully before investing. Past performance may or may not be sustained in future. To view the Full Disclaimer Click Here

“Good Ethics is Good Business”

At Epsilon, we believe that we should let you dream – leave the tension of how you will plan finance for those dreams to us. We are here to help you and guide you, every step of the way. By always doing the right thing. By gauging your risk profile, investment horizon and recommending products accordingly. By doing what is best for you to achieve your goals.

Get in Touch

Mumbai HQ

Unit No. 101, 1st Floor, Simba Towers, CTS no. 67-A/1, Goregaon, Mumbai - 400063

ARN- 243441
Epsilon CIN No: U67190MH2022PTC377576
MultiArk CIN No: U67100MH2022PTC377409
IRDAI Registration Number: CA0866
Corporate Agent (Composite)