Mumbai: India’s benchmark gauge of demand for protection against stock-market swings rose the most in four weeks as the CNX Nifty index declined for a sixth day.

The India VIX Index climbed 4.4% to 18.89 at the close in Mumbai, the steepest increase since 12 May. The CNX Nifty index fell 0.9% to 8,044.15. Global investors bought $20.4 million of index options on Friday, a fourth day of net purchases, according to data compiled by Bloomberg.

“Traders are buying options to hedge against their short index positions," Sahaj Agrawal, a vice-president of derivatives at Kotak Securities Ltd in Ahmedabad in western India, said in a phone interview. “VIX will remain elevated, signalling a strong negative sentiment in the market and low probability of an index reversal."

The rise in implied volatility shows increased demand for hedges after the Nifty slid 3.8% last week, its steepest weekly loss in more than three years. The declines came after central bank governor Raghuram Rajan said he’d assess the progress of the monsoon before adding to three interest-rate cuts this year. Below-normal rains would be credit negative for India’s ratings as they would lower farm output and stoke food prices, according to Moody’s Investors Service.

Nifty 8,500 calls and 8,000 puts were the most popular by the number of outstanding contracts. CNX Nifty index futures for June delivery declined 0.9% to 8,043.

Foreigners have sold $103 million of Indian stocks this month through 4 May, amid concern about the pace of earnings growth and the passage of economic bills in Parliament. Bloomberg