India VIX surge keeps many wary ahead of RBI policy

Thu May 2, 2013 2:56pm IST

A broker reacts while trading at a stock brokerage firm in Mumbai November 6, 2008. REUTERS/Arko Datta/Files

A broker reacts while trading at a stock brokerage firm in Mumbai November 6, 2008.

Credit: Reuters/Arko Datta/Files

Related Topics

Stocks

   

Reuters Market Eye - NSE's volatility index, or India VIX, adds 10.7 percent to 16.72, heading for a third straight session of gains, reflecting the rising volatility ahead of the central bank's policy review on Friday.

India VIX measures the cost of protection via options and is seen by some investors as a "fear" gauge.

As of 2:09 p.m., India VIX was up the most in a day since September 17, 2012.

The India VIX is rising at a time when the Nifty crossed the psychologically important 6,000 level, the first time since February 4, keeping many wary of profit-taking on policy day, dealers said.

The Reserve Bank of India is likely to cut interest rates on Friday for a third time this year, drawing comfort from a fall in inflation as it seeks to help lift the economy from its lowest growth in a decade, according to a Reuters poll.

As of Tuesday's close India VIX had a negative correlation of 61 percent with NSE stock index.

"The risk for long positions is increasing as depicted by India VIX, people are buying more puts than calls," said AK Prabhakar, senior vice president at brokerage AnandRathi.

If Nifty does not close above 6,035 on Friday then it can decline till 5,775 level, Prabhakar added.

(Reporting by Abhishek Vishnoi)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Economic Pulse

Economic Pulse

New govt promises low and stable tax regime for economic revival.  Full Article 

Global Growth

Global Growth

IMF cuts outlook, warns of stagnation risk in rich nations  Full Article 

Market Eye

Market Eye

Nifty retreats from record highs on profit taking.  Full Article 

Waning Enthusiasm

Waning Enthusiasm

Markets' post-election enthusiasm lost on consumers.  Full Article 

Banking Sector

Banking Sector

Banks not allowed to trade in bonds for infra lending - RBI.  Full Article 

Gold Imports

Gold Imports

Govt has no proposal to reduce gold import duty.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage