India VIX

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Recently, volatility gauge India VIX surged to as much as 15 percent on May 6 to 16.58, prompting experts to advise caution against large leveraged positions.

About India VIX:

  • It is an index that serves as a measure of market expectation of volatility in the near term. It is also known as fear index.
    • Volatility signifies the rate and magnitude of change in the stock price or index value.
  • The movement in the VIX index reflects the overall market volatility expectations over the next 30 days.
  • So, a spike in the VIX value means the market is expecting higher volatility in the near future.
  • The VIX index was first created by the Chicago Board Options Exchange (CBOE) and introduced in 1993 based on the prices of S&P 500 index.
  • Since then, it has become a globally-recognised gauge of volatility in the U.S equity markets.
  • The India VIX was launched with a similar intent in 2010 and is based on the computation methodology of CBOE though amended to align with the Indian markets.
  • India VIX It is calculated by the National Stock Exchange.

India VIX has a strong negative correlation with Nifty. When the India VIX falls, the Nifty is seen to rise and vice versa.

Q1: What is an Index Provider?

Index providers are those institutions that formulate and manage indices. One of the important roles of the index provider is to classify and define markets, as their indices represent a market or a proportion of a market and provide a benchmark of performance for that market or sector.

Source: India VIX jumps above 16.5 amid election-led volatility; experts advise caution on leveraged positions