According to analysts, the market is underneath stress due to uncertainty over the election final result and selloff by overseas buyers.The India VIX (volatility index) closed larger for the eleventh consecutive session on Thursday. The so-called worry gauge has jumped almost 80% from a low in April.
“There is speculation regarding election results… The India VIX spike indicates that high volatility will persist for some time. The spike is due to rising volume of options trades. Many investors are buying put options to protect their portfolios in case of an unexpected election outcome,” stated V Ok Vijayakumar, chief funding strategist, Geojit Financial Services.
From a nine-month low of 10.2 on April 23, India VIX jumped to 18.2 on Thursday – the best degree since Oct 2022 – ETIG knowledge confirmed.
“Govt campaigned strongly to gain a higher number of seats compared to the previous term but the (voter turnout) data is not in line with BJP’s assumption… A high VIX reading may trigger short-term bearishness,” stated Prashanth Tapse of Mehta Equities.
An enhance in volatility throughout elections is commonplace, however the sharp rally in Chinese shares within the final month has accelerated promoting by FPIs. “Foreign investors are selling in expensive Indian market and buying in cheap Chinese markets,” Vijayakumar stated.
While most buyers are shifting to safeguard income amid rising uncertainty, a bit of buyers with a long-term view, is planning to ‘purchase the dip’. Manjiri Satam (27), an information analyst, stated, “I hadn’t bought or sold any stocks since the lockdown ended two years ago, but now I have started to shortlist large-cap stocks that I want to add.”
“Investors should focus on the bigger picture and stock fundamentals. Mutual fund investors can use SIP and STP options to get the best out of this volatility,” stated Rajesh Bhatia, chief funding officer, ITI Mutual Fund.
According to analysts, NDA retaining energy is the bottom case state of affairs.
