India VIX Rises to 15: Key Events Ahead for the Stock Market

Market Decline and Rising Volatility

The NSE benchmark Nifty50 index has experienced a decline of approximately 5.6% from its all-time high of 26,277.35, which was reached last month. With this significant drop, the index has breached key technical levels, specifically the 20-day and 50-day moving averages (DMA). The downward trend of the 20-DMA indicates that bearish sentiments are now dominant in the market.

Adding to the uncertainty, high volatility has been observed over the past six trading sessions. Notably, in four of these six days, the daily range—the difference between the high and low—was above the 10-day average, highlighting the intensity of the recent decline. This increased volatility has been a telltale sign of the uncertainty facing investors.

Volatility Gauge: India VIX on the Rise

India VIX, often referred to as the market’s fear gauge, provides insights into investor sentiment regarding future volatility. On Monday, the VIX surpassed the level of 15, rising by 5%. This followed last week’s 18% gain, marking a new three-week high. The consistent rise in VIX reflects growing nervousness among investors, signaling that market volatility is far from subsiding.

Upcoming Key Events to Watch

In the coming days, several critical events could further shape market movements:

• RBI Policy Outcome: The Reserve Bank of India’s upcoming policy decision will be closely monitored by market participants. Interest rate changes or policy updates could have a substantial impact on market dynamics.
• Corporate Earnings: The corporate earnings season is also in full swing. Quarterly results from major companies could either provide some relief or add further pressure, depending on the outcome and market expectations.
• Geopolitical Tensions in West Asia: The evolving geopolitical situation in West Asia, especially its impact on oil prices, remains a key concern. Any significant developments in the region could have ripple effects across global markets.
• US Presidential Election Outcome: The upcoming US presidential polls are a major event that could influence global market sentiment. Uncertainty around political outcomes often contributes to increased volatility.
• State Elections in India: Elections in key states will also be watched closely. Political outcomes and potential policy changes in India can have an immediate impact on the stock market.

Given these multiple headwinds, market volatility is expected to persist, as reflected by the fact that the daily trading range has remained above the 10-day average for most of the past six sessions.

Key Contributors and Laggards

Since the peak hit in September 2024, several stocks have played a major role in dragging down the Nifty50 index. Key laggards include Reliance Industries, HDFC Bank, ICICI Bank, and L&T. Their underperformance has put downward pressure on the index and contributed to the recent market weakness.

On a positive note, Infosys and JSW Steel have bucked the trend and made positive contributions to the index during this turbulent period. Their performance highlights that, even in times of heightened volatility, select stocks can continue to provide resilience.

Year-to-Date Performance: A Silver Lining

Despite the sharp correction from its recent highs, the Nifty50 index is still up by 14% on a year-to-date (YTD) basis. This YTD performance suggests that, while recent declines have been significant, the index remains in positive territory for the year.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.