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Journalism of Courage
India VIX, or the fear index, jumped 23.65 per cent to close at 26.75, indicating heightened volatility after Lok Sabha results showed below-expected seats for the Bharatiya Janata Party (BJP).
The index, which is an indicator of the market’s expectation of volatility over the near term, zoomed 51 per cent to 31.71 during intraday trade.
It had eased on Monday after exit polls suggested a resounding victory for the BJP in the Lok Sabha elections and a third term for Prime Minister Narendra Modi. India VIX cooled off by 15 per cent to close at 20.94. On May 27, the India VIX surged to 26.19, close to an all-time high of 28.13 seen on June 16, 2022. The volatility index is a measure of the market’s expectation of volatility over the near term. Volatility is often described as the ‘rate and magnitude of changes in prices’ and in finance often referred to as risk. Usually, during periods of market volatility, the market moves steeply up or down and the volatility index tends to rise. As volatility subsides, the volatility index declines.
India VIX is a volatility index computed by the NSE based on the order book of NIFTY Options. For this, the best bid-ask quotes of near and next-month NIFTY options contracts which are traded on the F&O segment of NSE are used.
