All You Need to Know About India Vix Index

What is India VIX

India VIX is a concept that was borrowed from the CBOE or “Chicago Board Options Exchange”. The National Stock Exchange (NSE) of India procured a license to use the trademark “VIX”. India VIX is a volatility index, popularly known as the “risk index”. It predicts the volatility in the market for a short term (30 days) by calculating the potential fluctuation in the prices of the underlying assets. The index is denoted in percentage (%). This is an index to look for when you are investing in the stock market giving you an idea of the amount of risk and returns related to your investment.  Let us learn more about the India VIX and how it can help in stock market trading.

Key facts to know about India VIX

  • The India VIX usually hovers in the range of 15 to 20. If it is in the lower range, that means the market is predicted to be stable and good for investing with fewer risks. Risk or volatility is higher when the india vix index is higher.
  • There’s a complex formula to calculate the index which takes Strike price, Interval between strike prices, Time, Interest rate, and Forward index level as the inputs.
  • The market volatility is calculated based on historical data and gives an idea to the investors on potential risks or gains. However, it is not negative for all investors when the VIX is high. They might still gain by investing in undervalued stocks.
  • As experts say, lower volatility might be beneficial for long-term investors. Investors seeking good returns in the short term might benefit when the market is more volatile.

Book Profit or Invest?

Currently, the India VIX is in the range of 13-14 which is the lowest in recent years. Industry stalwarts foresee a possible correction in the market in the coming weeks. The low volatility might be a consequence of the investors’ muted sentiment and fear of a possible recession in the US.  The experts advise to taking caution before investing and selecting stocks that ensure the lowest impact when the volatility increases. There is a high possibility for the index to go to a level of 20-25 in a few weeks. Hence, short-term investors, who tend to profit from market fluctuations, might take precautionary measures to secure their investments.

Research before you leap

Investing in the stock market involves higher levels of risk. Still, it remains one of the most popular investment options in India. However, it needs a thorough understanding and knowledge about the key factors and trends regulating the market to become successful in stock trading. There are many indices like the India VIX that help investors in gauging the market risks or performance of stocks. One should always seek expert advice and refrain from putting random bets hoping for good returns. So, get yourself equipped with the necessary insights before pouring in money and selecting the right stocks to invest in.


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