India VIX hits one-year high as Nifty, rupee tumble

Riken Mehta

Foreign and domestic investors have pressed a panic button in the wake of rupee touching an all-time low of 58.95 on Tuesday. The weakness in rupee has led to a sharp fall in equities with key benchmark indices losing over 6 percent in the last eleven sessions.

Volatility Index or the fear gauge indicator is a measure of the amount by which an underlying Index is expected to fluctuate in the near-term. India VIX, a volatility index based on the Nifty index Option prices has been making higher lows and higher highs in last one month. The India VIX has touched a high of 19.85 today, a level last seen in June, 2012. As seen from the chart, India VIX is inversely proportional correlated to the Nifty.

Sanju Verma of Violet Arch Cap told CNBC-TV18, "The lower end of the India VIX has been trading in the region of 13-14, and the higher end has been trading in a band of 18-20. That is a cause of concern. If the India VIX were to breach 20 on the upside, in the intermediate to short-term there could be more trouble."

Live Indian Markets: BSE Sensex up 110 points; Europe opens in green

Riken Mehta
Moneycontrol.com

The S&P BSE Sensex has erased half of its early morning gains and is now up 100 points after a gap up of nearly 200 points on strong cues from the global markets.

The European markets have open in green. CAC was the biggest outperformer with over 1.5 percent gains followed by DAX up 1% and FTSE up 0.5%.

Traders are now focusing back on the domestic cues and expect the Finance Minister to announce more measures to jump start the sagging economy.

Broking house Sharekhan is bearish on the market. The research firm in it noon update advise traders, “The short-term bias would remain negative for a target of 5550 with reversal around 5810. The medium term outlook would also remain negative, as the index has completed a W-X-Y pull-back and also formed an ending diagonal pattern in the last leg.”

Stocks from interest rate sensitive sectors like banking and realty are rallying on short covering. Buying is also seen in metal stocks.

The broader markets have outperformed largecaps today. Stocks like Essar Oil, GMR Infra, Opto Circuits, Core Education, HDIL, IRB Infra made money for traders.

Safe-haven or popularly termed as defensive stocks in market parlance are trading lower on profit booking. However, if the market loses steam then these stocks will be once again back on buyer’s radar.

The rollover in Bank Nifty is around 18% in afternoon trade. India VIX is down 2.7% at 15.12. Nifty 5700 Put has added 10.5 lakh shares in open interest.

Fresh long position is seen in DLF and GMR Infra. Short covering is witness in Reliance Communications, Shree Renuka and HDIL.

In the currency space, the euro has strengthened above 1.30, while the dollar index has slipped towards 82. Brent crude is steady above 108 dollar levels.