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Business News/ Markets / Stock Markets/  India VIX: Volatility may rise in the upcoming sessions following a three-month declining trend; here's why
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India VIX: Volatility may rise in the upcoming sessions following a three-month declining trend; here's why

India VIX has been declining since February 2024, while the market has been advancing steadily fueled by domestic and global factors. Analysts note that every dip is being bought into, setting new records. Market experts believe India VIX is in oversold territory and approaching support levels.

According to investing.com, the India VIX fell 2.96 percent in February, 17.60 percent in March, and 11.94% thus far in April. So far in 2024, India VIX is down 20%. Premium
According to investing.com, the India VIX fell 2.96 percent in February, 17.60 percent in March, and 11.94% thus far in April. So far in 2024, India VIX is down 20%.

Since February 2024, the fear gauge index, India VIX, has been declining. This has an inverse correlation with the market, which has been headed northward. From the beginning of the calendar year 2024, the market has been advancing steadily, setting new records, and every dip is getting bought into, according to analysts. This year's surge so far in Indian markets was fuelled by a combination of both domestic and global factors. 

According to investing.com, the India VIX fell 2.96 percent in February, 17.60 percent in March, and 11.94% thus far in April. So far in 2024, India VIX is down 20%. 

“In general terms, a lower VIX level usually implies that the market is confident about the movement, especially on the positive side. Given the renewed buying interest after weakness seen in early March and high volatility in the mid- and small-cap space, we have seen Nifty 50 confidently moving 1000 old points in 15 days, which is due to no big hurdles leading to volatility over the near term," explained Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities.

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Following the release of Wednesday's global data points, the US CPI data, which above street predictions and showed the greatest rise in inflation since September, caused the India VIX to jump slightly today.

Also Read: US Fed rate cut unlikely in June as US inflation hots up. What this means for Indian investors and what should they do?

On Friday's session, the domestic benchmark indices were trading in red amid weak global cues. At 12:11 IST, Nifty 50, was at 22,692.55 level, down 0.27%. India VIX today was up over 1%. Six of April's nine trading sessions saw the India VIX close in the negative. On Wednesday's session, The NSE Nifty 50 rose 0.49% to 22,753.80, hitting an all-time high in intraday trading for the third day in a row.

India VIX forecast 

The domestic market is believed to be in an overbought zone and have seen approaching resistance. The India VIX is in oversold territory, approaching support levels; hence, going forward, any dip in the benchmark may trigger a surge in the India VIX. Also, as we head into the earning season and election period, there's a high probability of a surge in the India VIX, believes market experts.

Tapse said that investors across the world will be closely observing Fed Chair Powell's remarks during the press conference at the upcoming Federal Open Market Committee (FOMC) meeting, which is set for April 30-May 1, 2024. Tapse anticipates that the INDIA Vix will climb during the upcoming session and result in some kind of profit booking attempts during the upcoming weekdays.

Also Read: Sensex Today Live Updates : Sensex down 600pts, Nifty at 22,570; Broader markets, sectoral indices fall

Technical Views 

Anshul Jain, Head of Research at Lakshmishree Investments & Securities Ltd highlighted that the India VIX has reversed from a significant resistance level of 16.5, indicating a potential shift in market sentiment towards increased volatility. Additionally, on weekly charts throughout 2023, the India VIX has formed multiple bottoms around 8.7, suggesting a robust support level that could influence future price action. Furthermore, both monthly and weekly RSI indicators are signalling oversold conditions, with the daily RSI reaching extremely oversold levels. Given these technical factors, there is growing anticipation for a bounce in the India VIX, especially considering its decline in six out of the last eight weeks.

Also Read: Morgan Stanley hikes Q3 outlook to $94 on geopolitical tensions as Brent hovers over $90/bbl

Any bounce in the India VIX could potentially trigger a short-term correction in the markets, leading to increased volatility and potential downside risks for equities. Therefore, market participants should closely monitor the movements of the India VIX and consider adjusting their trading strategies accordingly to navigate the evolving market conditions. As volatility remains a key determinant of market dynamics, staying informed about developments in the India VIX can help investors make well-informed decisions and manage their portfolios effectively in the face of changing market sentiment, advised Jain.

Also Read: Bharti Hexacom share price extends gains after dream debut. Buy, sell or hold?

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 12 Apr 2024, 12:59 PM IST
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