Heard two interesting statements today from equity/market analysts on a business news channel.The first one was “Indian equities have not only fallen but its backbone is now broken” and the second one was even more interesting “are we entering a bear market from a long term bull market scenario just few weeks ago when every other day new historic highs were tested in Indian benchmarks. It was more of a question than a statement! But, nevertheless quite interesting question to ask.
The India VIX, which measures the implied volatility of Nifty 50 options, was up 4.40% to 18.91 a new 6-month high at 4th October close. Bears have tightened their grip as the Sensex plunged more than 800 points to close over three-month low. Crude oil prices touched fresh four-year high and rupee hit record low raising fears of a broadening current account deficit.
These are not only the times when markets fall but the confidence of an average investor is shaken. At the last close, the Nifty 50 lost 2.39% to hit a new 3-month low, while the BSE Sensex 30 index declined 2.24%.
When we analyse the above graph, during July and August India VIX traded broadly between 12.00 and 13.50 and it started shooting up from around mid of September and now at a multi month high of about 19.
As long as VIX stays above 17 level, the turbulence in the Indian equities benchmarks is likely to continue whereas a level below 17 will indicate some pullback or a pause in the sharp fall. RBI’s monetary policy rate decision today and the follow up statements will be very crucial for the next move in India VIX. The volatility has just begun!
4th July- 4th Oct-2018:Highest: 19.67 Lowest: 9.43 Diff.: 10.24 Average: 13.64 Change %: 50.59
|Returns – INDIA VIX|
|YTD :||49.25%||1 Week:||11.80%||1 Month:||37.30%||3 Months:||49.40%|
|6 Months:||15.80%||1 Year :||60.30%||2 Year :||26.20%||3 Year :||-1.10%|
|Simple Moving Averages|
|30 Days :||14.59||50 Days :||13.84||150 Days :||13.75||200 Days :||14.07|