India VIX has now fallen substantially at 17.35 levels. It tested about 23 on 31 October, the day when Nifty was looking all set to break below crucial 10,000 mark. However, the Nifty level did not breach as it had a very strong support at this level. Sudden fall in VIX is providing short-term stability in the market. Nifty, now from about 10,004 level on 26 October 2018 has steadily (though not linear) moved now to 10,800 level.
Nifty formed bullish candle on the daily charts but the market breadth remained in favour of bears, which was a cause of concern. Index is now comfortably above its crucial short term moving averages. Bulls have now managed to take Nifty at 10,805 well above its 200-Day Moving Averages, which was placed around its recent swing high of 10,780 levels.
We also have five states lined up for polls/results that is Madhya Pradesh, Chhattisgarh, Rajasthan, Mizoram and Telangana which is also being touted as the semi-final ahead of general elections 2019.Opinion polls show clear loss of BJP in Rajasthan and very tough fight in MP and Chhattisgarh. Telangana also does not seem to be a cakewalk for TRS post congress, TDP alliance. Failure of BJP in retaining the states could be devastating for the equity market in the short run taking India VIX above 20 levels whereas good show by BJP can potentially take VIX below 15 level and Nifty towards 11,000.