Stock market today: After bleeding for the five straight sessions, the Indian stock market had a sigh of relief as there was some relief rally in early morning deals on Friday. However, the Indian volatility index, India VIX, continues to remain on the higher side. The India VIX today opened flat at 18.20, but the index soon gathered momentum and touched an intraday high of 18.66. While climbing to this intraday high, the volatility index registered around 70 per cent rise in one month, which may not go down well among the bulls. According to stock market experts, Indian VIX today is rising globally and domestically. In the domestic market, the primary factor fueling the India VIX Index is ongoing Lok Sabha elections, whereas the global factors include rising US Treasury Yields and geo-political tension. They said that the volatility index is in the 17-19 range, and upon breaching the upper hurdle, it may reach the 22 mark soon.
Why is the India VIX Index skyrocketing?
Speaking on the reasons for the rising Indian VIX today, Amit Goel, Co-Founder & Chief Global Strategist at Pace 360, said, “The India VIX has been increasing for the last few days, attributed to global and domestic factors. The primary factor is the upcoming Lok Sabha elections in India, scheduled for announcement of results on June 4th, 2024. Investors are jittery about the outcome and the potential impact on the markets, thus driving the VIX up. Historically, the VIX tends to rise in the lead-up to elections due to this uncertainty. Alongside the domestic event, global factors such as the US Federal Reserve’s interest rate decisions and recent selling by foreign investors are also contributing to the rise in India VIX.”
On how India VIX Index is connected to the Indian stock market today, Avdhut Bagkar, Derivatives & Technical Analyst at StoxBox, said, “the INDIA VIX fails to cool off and slide below 16 levels, we could see more selling pressure in the market. Under such conditions, aggressive traders are advised to avoid taking overleveraged positions and instead seek hedging strategies.”
India VIX historial data
Anticipating further increase in the India VIX Index, Sumeet Bagadia, Executive Director at Choice Broking, commented, “The India VIX is currently in the 17 to 19 range, facing resistance at the 19 level. It retraced from this level in the Thursday and Friday sessions. Once it overcomes this resistance, it is likely to touch the 22 level in the near future.” This forecast can guide investors in their decision-making process.
Despite the rise in the India VIX, Sumeet Bagadia, Executive Director at Choice Broking, maintains a positive outlook. He sees it as an indication of the fear factor existing in the Indian stock market ahead of the Lok Sabha election results, scheduled on 4th June 2024. However, he reassures that the fear factor is manageable, and such a rise is expected for Dalal Street investors. He points out that the India VIX Index, which measures the market’s expectation of volatility over the next 30 days, touched a high of 39.30 during the 2014 Lok Sabha elections, whereas it touched the nearly 30 mark during the 2019 Lok Sabha polls. He further elaborated that India’s VIX surged to 92 levels during the stock market crash in 2008, whereas it touched 86.63 peaks when the Indian stock crashed in 2020 after the outbreak of the COVID pandemic.
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Published: 10 May 2024, 02:01 PM IST
