Mumbai: Volatility in the Indian stock markets has been extraordinary over the past week with the market rising. In the stock markets today, Nifty fell by 1.55 percent i.e. 345 points and Sensex fell by 1.45 percent i.e. 1062.22 points and India VIX index rose by 6.56 percent.
India VIX index, which had fallen as low as 17.08 yesterday, opened today at 17.08 and jumped to 19.17 and finally closed at 18.20, up 1.12 points or 6.56 per cent. It is noteworthy that the India VIX index, based on the prices of Nifty index options, has increased by 78.43 percent to reach the level of 18.20 on May 9, 2024, after falling by 20 percent to the level of 10.2 on April 23.
Voting for the three phases of Lok Sabha elections has ended and index-based volatility is rising in the market as the ruling party BJP is expected to win fewer seats than expected due to low turnout so far.
Experts say that along with these factors, portfolio investors are buying put options, which are considered safe, to hedge their holdings, and on the other hand, traders are on the assumption of major market volatility after the elections. Both call and put options are bought.
The thing to be noted here is that if we look at the historical trend, there has been a big jump in VIX before the Lok Sabha elections. In 2019, the VIX increased 150 percent from levels 12 to 30. Whereas in 2014, VIX increased by 212 percent from 12.5 level to 39.
