Error message
- Notice: Undefined index: Index in Drupal\fivepaisa_widgets\Controller\Heatmap->getIndicesHeatmapData() (line 318 of modules/custom/fivepaisa_widgets/src/Controller/Heatmap.php).
- Warning: Invalid argument supplied for foreach() in Drupal\fivepaisa_widgets\Controller\Heatmap->getIndicesHeatmapData() (line 323 of modules/custom/fivepaisa_widgets/src/Controller/Heatmap.php).
- User error: "response" is an invalid render array key in Drupal\Core\Render\Element::children() (line 98 of core/lib/Drupal/Core/Render/Element.php).
iThe current values are delayed, open demat account for live values.
India VIX Sector Performance
Top Performing
Sector Name | Percentage Change |
---|---|
Infrastructure Investment Trusts | 0.24 |
Under Performing
Sector Name | Percentage Change |
---|---|
Diamond, Gems and Jewellery | -3.16 |
IT - Hardware | -2.32 |
Leather | -1.73 |
Ceramic Products | -2.4 |
India VIX
India VIX Chart
Constituent Companies
Company | Market Cap | Market Price | Volume | Sector |
---|
India VIX
For a long time, market participants have been trying to get a pulse of the market and the sentiments of market players. A volatility index, known as India VIX, serves this purpose. It helps investors look for bottoms, tops, and lulls in the trend while showing them whether the market is optimistic or fearful about the growth prospects. Continue reading to understand what exactly India VIX is, why it is considered an important indicator, and how to interpret its rises and falls.
What is India VIX or India Volatile Index?
India VIX is India’s volatility index. The value of India VIX on a particular trading day shows the market’s expectation of volatility in the next 30 days. India VIX was introduced in the country in 2003 by the National Stock Exchange (NSE), following in the footsteps of the Chicago Board Options Exchange.
Generally, a volatility index measures the extent to which an underlying index is expected to fluctuate in the near term. It is calculated based on the order book of the underlying index’s options. In India, this index is the Nifty Option. So, India VIX measures both – the supply and demand for Nifty options and the put-call ratio.
A higher value of India VIX indicates higher volatility and fear of negative growth among market participants and vice versa. Let’s understand this using an example. Let’s assume the value of India VIX is 20. This means traders are expecting 20% volatility in the next 30 days. To further boil it down, it means, within the next 30 days, traders expect the value of Nifty to range between +20% and -15% from its current value.
However, it is important to know that a volatility index is not similar to a price index like Nifty. While the price index takes the prices of individual equities into account, the volatility index considers the order book of the underlying index and represents the volatility in a percentage.
What is Market Volatility?
The stock market is dynamic, with indexes and stocks settling several percentage points higher or lower than the previous day. Sometimes though, the market undergoes dramatic price changes, and a measure of these price movements is called market volatility.
It measures both the frequency and enormity of the price movements. Generally, the more frequently and larger these price movements occur, the more volatile the market is.
Mathematically, however, volatility is the statistical measure of the dispersion of market prices on an annualised basis. It is calculated as standard deviation multiplied by the square root of time.
Why is India VIX important?
India VIX helps day traders figure out whether the market at large is fearful or fairly complacent about the market in the short term. It helps them calculate risk. If the volatility is high, traders’ stop losses might get triggered, in which case they would want to lower leverage and expand the stop losses.
While long-term traders are not affected by short-term volatility, it is easy to assume India VIX might not be important for this class of traders. However, they may face the risk of mark-to-market (MTM) loss restrictions. An MTM loss is incurred when a stock’s price declines from its original price and the current price changes significantly. So if they know the trends of India VIX, they might be quick to make the right decision about their portfolio.
Options traders also benefit from India VIX. It tells these traders whether to buy or sell an option, considering the market volatility. If the volatility is high, option buyers may benefit; if it is low, the sellers benefit.
India VIX can also help mutual fund managers and portfolio managers — it can help them decide when to invest in high or low-beta stocks to clock maximum profits.
How is India VIX calculated?
The value of India VIX is derived using the Black and Scholes (B&S) model. Prices for options contracts are frequently calculated using this model. While this model is generally accurate, it makes some assumptions that may deviate the final result from the real-world result. It uses five variables for the calculation of India VIX:
● Strike price
● The market price of the stock
● Expiry date
● Risk-free returns
● Volatility
With these variables, options sellers can set reasonable prices for the options they sell. For calculation, Nifty options’ 30 days bid-ask quotes are considered. These options are traded on NSE’s futures and options segment.
How to interpret rises and falls in India VIX?
India VIX rises and falls continuously, along with the fluctuations in the market. If India VIX falls, the market expects the volatility to rise in the short term. At this point, the value of India VIX would be higher or close to 30–35.
And if India VIX is falling, the market at large is not so worried about rising volatility. And at this time, India VIX would sport values close to 15.
What is the Relation between India VIX and Nifty?
Nifty is the underlying index on which India VIX’s values are based. India VIX considers the order book of Nifty options to predict the market’s volatility over 30 days. As per past trends, India VIX and Nifty are negatively correlated. This means when India VIX rises; the Nifty tends to fall and vice versa.
This makes sense in theory – if India VIX is rising, the market expects high volatility in the next 30 days. High volatility indicates high risk, which makes traders weary of placing huge bets in the market, which results in falling Nifty prices.
Conclusion
Analysts, investors, and fund managers consider India VIX to measure market stress when making investing decisions. It keeps the market participants in line by encouraging them to buy low and sell high. When VIX spikes, investors consider pursuing safer investment strategies to lower risk and vice versa.
Other Indices
Indices Name | Price | Price Change (% change) |
---|---|---|
India VIX | 14.6325 | 0.66 (4.74%) |
Nifty 10 Yr Benchmark G-Sec | 2410.5 | -2.55 (-0.11%) |
Nifty 10 Yr Benchmark G-Sec (Clean Price) | 887.78 | -1.11 (-0.12%) |
Nifty 100 | 25022.2 | -253.3 (-1%) |
Nifty 100 Equal Weight | 32142.4 | -507 (-1.55%) |
Faqs
What is the normal range of India VIX?
The normal range of India VIX is between 15–35. A value close to or less than 15 suggests low volatility, whereas a value close to or higher than 35 suggests high volatility.
Is India VIX a good investment?
India VIX makes a good investment depending on your trading strategy. One strategy is to buy when India VIX is high and sell when it is low. However, this is risky and expensive. Another strategy can be investing heavily in the futures of India VIX. Another way to trade in VIX is by investing in volatility-based exchange-traded funds (ETFs).
Who can use India VIX?
Everyone can use India VIX to make trading decisions, from day traders to long-term investors to option writers to portfolio and fund managers.
What determines VIX spikes?
As stated earlier, India VIX indicates the volatility of Nifty options. So India VIX spikes when there is an increased demand for puts, increasing the implied volatility.
What does it mean when VIX goes down?
When India VIX goes down, it means the market at large is not expecting periods of high volatility. This means the fear is low, the market is stable, and it expects long-term growth. This is also the time when Nifty experiences a price rise.
Latest News
- Oct 25, 2024
Summary Godavari Biorefineries IPO has closed with a moderate response from investors, achieving a final subscription of 1.87 times by 25th October 2024 at 5:19:07 PM (Day 3). The public issue witnessed varied demand across investor categories. The Qualified Institutional Buyers (QIB) category led with a subscription of 2.76 times. The Retail Investors segment showed decent interest with 1.76 times subscription.
- Oct 25, 2024
Afcons Infrastructure's initial public offering (IPO) has received modest investor interest on its opening day. The IPO witnessed cautious demand, resulting in a 0.08 times subscription by 2:01:10 PM on day one. This initial response indicates measured investor sentiment towards Afcons Infrastructure's shares at the start of the subscription period.
- Oct 25, 2024
Afcons Infrastructure IPO, valued at ₹5,430 crore, is now open for investors, offering a chance to participate in one of India’s major infrastructure companies. This IPO appeals to investors seeking to capitalise on India’s ongoing infrastructure growth, especially given Afcons’ extensive experience as part of the Shapoorji Pallonji Group. Overview of Afcons Infrastructure IPO
- Oct 25, 2024
Afcons Infrastructure IPO saw a strong anchor allocation response, with 36.35% of the total IPO size subscribed by anchor investors. Out of 9,63,35,319 shares on offer, anchors picked up 3,50,21,597 shares, demonstrating robust market confidence. The anchor allocation details were reported to the stock exchanges on 24th October 2024, just ahead of the IPO opening on 25th October 2024.
Latest Blogs
Nifty Prediction for 28th October Our markets witnessed sharp correction throughout the week and a broad market sell-off was seen leading to nervousness amongst market participants. Nifty ended the week around 24200 with a weekly loss of over two and a half percent.
- Oct 25, 2024
Swing Trading Stocks for the Week iJoin the club of lakhs of tech savvy investors!
- Oct 25, 2024
Highlights 1. ITC's share price has increased over 2.67% year to date in 2024 including today’s 1.88% gain. 2. ITC's financial performance has increased over the past year with operating profit Increasing from ₹25,915 crores in March 2023 to ₹27,302 crores till TTM 2024. 3. ITC's quarterly earnings report highlighted a decline in net profit in the September quarters.
- Oct 25, 2024
What is Muhurat Trading? According to the Hindu calendar, muhurat trade is a one-hour trading period that happens on Diwali evening. A "muhurat" is an auspicious period when merchants and investors buy and sell shares in the hopes of gaining wealth and good fortune for the upcoming year. Muhurat trading times are set by stock exchanges a few days before to Diwali.
- Oct 25, 2024