Mumbai: The index, which tracks market volatility or fear, has risen more than 50 percent this year, as a deadly coronavirus outbreak has spread around the world, suggesting a sale, ₹3. 14 trillion of Indian investors’ assets this year may not have been exhausted.
The Indian Volatility Index (VIX), which reflects investors’ perceptions of volatility for at least one month ahead, rose 52.3% year-on-year.
The index closed Thursday with a nine-month high at 17.59, while the Nifty 50-year benchmark fell 0.39% to 11,633.30.
Fears that the rapid spread of the coronavirus will harm the global economy much more than expected keep investors wary. Stocks fell on the markets as the virus spread to many other countries. Indian stocks decreased by almost 4% this week.
The volatility index has a return of the Nifty index. At higher levels, the VIX index indicates that investors expect a significant correction at least for next month.
The Nifty index lost 6.41% of its record high of 12,430.50 over the course of 20 January, while the VIX rose 14.65% over the same period.
Market volatility may also be related to the expiration of the February futures and option series on Thursday. According to Chandan Taparia, technical analyst of derivatives at Motilal Oswal Financial Services, the Indian VIX index rose 5.74% to 17.76 at the end of his tenure, while the VIX index rose 30% this week alone.
Nifty closed the February series with a loss of 3.34%, after the February series started with a negative result due to the disappointment of the EU budget, but managed to recover from 11,615 levels and return to 12,246. If it doesn’t exceed 11,777, it can continue its weakness to 11,533 zones; then 11,430-11,333 zones, he said.
(diagram: Jain/Mint paras)
Analysts said the nervousness could last a while. Rahul Mishra, Vice President (Equity Derivatives Sales) of Emkay Global Financial Services, said markets may remain volatile (in the short term), with an emphasis on the development of the coronavirus. Nifty is expected to stay in the 11,500-12,000 range in March, he said.
Before the virus was sold this week, many investors thought it would cause short-term economic damage, with an emphasis on China, with a limited impact on the developed world due to disruptions in the supply chain.
However, as the infection has spread outside China to countries such as South Korea, Japan and Italy, the perception has clearly changed, leading to fears that drastic measures to contain the virus, such as those applied in China, may be necessary worldwide.
According to Credit Suisse, the most important thing is not to panic. Although volatility is increasing and cyclical markets such as equities and commodities have experienced significant setbacks, we believe that the fundamental situation of most asset classes has not changed that much. In fact, we saw a recovery in cyclical markets when lightning struck. The problem is that it is very difficult, says a note dated 26 January 2006. February.
Referring to baseline data on Chinese consumer demand, supply chain disruptions, high frequency tourism data and a still high level of anxiety in many Asian countries, Nomura said the blow to Asian growth is likely to be significant in the first quarter of 2020.
Analysts said investors will closely monitor Gross Domestic Product (GDP) data for the third financial quarter, which is expected to be released on Friday.
Despite the high volatility, foreign institutional investors (FIIs) continue to invest in Indian equities.
By 2020, the IPI has so far injected $2.68 billion into Indian equities. While domestic institutional investors are net buyers of Indian equities worth ₹ ₹11 561.42 Crore.