With the market reaching a two year low and pain not seeing to subside, the common question among most investors is whether we have reached the bottom and is it the best time to buy stocks.
While reading today’s ET, I came across India VIX which is a Volatility Index based on the Nifty 50 Index Option prices. The best part of this index is that it gives a 30 day horizon to the implied risk in the equity markets.
Volatility Index measures market’s expectation of volatility over the near term. Volatility here refers to rate of changes in prices or risk. It is denoted in percentage and higher the VIX, higher is the volatility.
The index does not tell about the price movement but the risk associates with the stocks. Normally is a range bound or mild upside market, VIX is low while in case of selling pressure, value of VIX rises. If value of India VIX is above 30, then market is perceived fragile and above 40, market is uncertain while above 50, market is dangerous.
The value of VIX was highest at 68.33 on September 18 while on October 10 it was 67.78 signifying that there are high chances of market seeing further lower levels during November first week .
Wonder why Indian business channels, doesn’t show VIX while they always follow the CBoE VIX.
To find out latest and historical India VIX values, click here.