India VIX jumped 68% in three weeks to reach 17.5 on Monday. This surge happened while Sensex and Nifty gained over 7%. Rohit Srivastava said, "If the market rises faster than expected, the VIX can also move higher." Meanwhile, BSE MidCap and SmallCap indices fell by up to 4.6%.
Synopsis
India VIX, which measures market volatility, has risen by 68% over the last three weeks. This increase occurred as benchmark indices, like Sensex and Nifty, gained over 7%. Meanwhile, broader market indices, BSE MidCap 150 and BSE SmallCap 250, experienced declines of 3% and 4.6%, respectively. Market experts note that volatility can rise during rapid price increases as well.
Listen to this article in summarized format
Loading...
×
Mumbai: India VIX, an index that measures expected volatility in the stock market, has surged in recent weeks even as benchmark indices have staged a recovery, suggesting that options markets are pricing in larger swings.
India VIX has risen 68% in the past three weeks to 17.5 on Monday from 10.5 on September 23. The rise has come even as the benchmark Sensex and Nifty have gained more than 7% over the same period. However, the broader market has lagged, with the BSE MidCap 150 and BSE SmallCap 250 indices declining 3% & 4.6%, respectively.
India VIX measures the market's expectation of volatility over the next 30 days. It indicates the magnitude of potential price swings rather than the direction in which stocks are expected to move.
The index generally rises when markets fall, as investors seek protection against further losses. However, the relationship is not always inverse, experts said. A sharp rally can also push up volatility when prices move faster than expected.
Live Events
"People are used to the idea that volatility and the Nifty have an inverse relationship: when the Nifty falls, volatility rises, and when it rises, volatility falls. But that is not always the case. The VIX can reflect volatility in either direction. If the market rises faster than expected, the VIX can also move higher," said Rohit Srivastava, founder of Strike Money and Indiacharts.
Short-covering in the derivatives market is another factor that could have contributed to the rise in India VIX. Foreign investor short positions in Nifty futures have declined from around 280,000 contracts to nearly 106,000 contracts. "When short positions are covered, the premium in Nifty futures can rise. Since option prices are linked to the underlying futures price, this can influence option premiums and, in turn, the India VIX," said Chandan Taparia, head of technical and derivatives research at Motilal Oswal.
(You can now subscribe to our ETMarkets WhatsApp channel)
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...moreless
(You can now subscribe to our ETMarkets WhatsApp channel)
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...moreless
Business of Odd Things: The farm that needs no land, freshwater, or fertiliser
KYC and KYB: Inside Pidilite, the company that turned Fevicol into a word for a strong bond – Part 1 of 3
Seoul halts trading, Nifty has its best week since 2021: Money leaving the AI trade – will it land in India?
Junk bonds are cracking at the bottom. Will the noise get loud enough to make ‘junk bond’ a household term again?
PNG connections rise half a million, but how many use piped gas for cooking?
Some elections matter more than you know: No crop changed in the fields, yet sugar, coffee and soya got cheaper in a day
Find this comment offensive?
Choose your reason below and click on the Report button. This will alert our moderators to take action
Name
Reason for reporting:
Foul languageSlanderousInciting hatred against a certain communityOthers
Your Reason has been Reported to the admin.
Continue reading with one of these options:
Limited Access
Free
Login to get access to some exclusive stories
& personalised newsletters
Login Now
Unlimited Access
Starting @ Rs120/month
Get access to exclusive stories, expert opinions &
in-depth stock reports
Subscribe Now
ET
Unlock Access to All Exclusives with ETPrime FREE TRIAL
15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers
Trial offer expiring in00 : 05 : 00
Uh-oh! This is an exclusive story available for selected readers only.
Worry not. You’re just a step away.
Prime Account Detected!
It seems like you're already an ETPrime member with
Unlock ETPrime's Exclusive Stories Today!
Subscribe to gain powerful insights on business, stock market and industry trends.
Big Price Drop! Flat 40% Off
Student Only Offer
Already a Member? Sign In now
Already a Member? Sign In now
Already a Member? Sign In now
Offer Exclusively For You
Save up to Rs. 700/-
ON ET PRIME MEMBERSHIP
Avail Offer
Offer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail Offer
Offer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail Offer
Offer Exclusively For You
Get Flat 40% Off
Then ₹ 1749 for 1 year
Avail Offer
Offer Exclusively For You
ET Prime at ₹ 49 for 1 month
Then ₹ 1749 for 1 year
Avail Offer
Special Offer
Get flat 40% off on ETPrime
Avail Offer
Avail Offer
Claim Now
Already a Member? Sign In now
What’s Included with
ETPrime Membership
1Exclusive Insights That Matter
Uncover the truth with our investigative stories
Make strategic moves using the real-world case studies
Read industry-specific stories to identify emerging trends
Spot opportunities with in-depth insights that matter
Trump temper on H-1B visas is forcing Indians to do these things to stay put in US
What Adani’s US indictment means for India Inc’s overseas fundraising
Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.
Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?
Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?
The problem with lab grown diamonds
Why a falling rupee is a better option for the economy
A list of top 20 momentum stocks that have delivered massive returns in one year
2Invest Wisely With Smart Market Tools & Investment Ideas
Get daily trade ideas from SEBI-registered research analysts.
Grow your wealth with stock ideas & sectoral trends.
All-in-one stock research with Stock Score, peer comparison & key signals.
Get to know where the market bulls are investing to identify the right stocks.
Check the score based on the company's fundamentals, solvency, growth, risk & ownership to decide the right stocks.
Analyze the market sentiments & identify the trend reversal for strategic decisions.
Ask your stock queries & get assured replies by ET appointed, SEBI registered experts.
3Stay informed anytime, anywhere with ET ePaper
ePaper - Print View
Read the PDF version of ET newspaper. Download & access it offline anytime.
ePaper - Digital View
Read your daily newspaper in Digital View & get it delivered to your inbox everyday.
Wealth Edition
Manage your money efficiently with this weekly money management guide.
4Times Of India Subscription (1 Year)
TOI ePaper
Read the PDF version of TOI newspaper. Download & access it offline anytime.
Deep Explainers
Explore the In-depth explanation of complex topics for everyday life decisions.
Health+ Stories
Get fitter with daily health insights committed to your well-being.
Personal Finance+ Stories
Manage your wealth better with in-depth insights & updates on finance.
5Enjoy Complimentary Subscriptions From Top Brands
Docubay Subscription
Stream new documentaries from all across the world every day.