Nifty 50: Uptrend Fades, India VIX Closes at ‘All-Time Low’!


After clocking 4 straight green weeks, the last week broke the winning streak as the benchmark index ended the week 0.5% lower at 19,646.05. This week’s selling pressure was quite evident with the banking space sliding to lower levels.

The uptrend seems to be fading now as bulls are finding it difficult to make new long positions around the 20K mark. Although a retracement of around 430 points from the all-time high of 19,991 to 19,560 has already materialized, this is probably not enough and some more of it can come in the next week.

However, the talk of the town is the , or the volatility index. This week, India VIX closed 11.75% lower at 10.14, which is the lowest weekly closing ‘ever’. As far as I could go back (till 2009) it is an all-time low weekly closing which is surprising considering the fact that we have witnessed some retracement in the Indian markets.

The calculation of VIX is derived from options prices and a lower value means investors are expecting lower volatility in Nifty 50. Precisely, a value of 10.14 means that the market is expecting the Nifty 50 index to move (up/down) by 10.14% in the next 1 year. That’s super-low volatility.

This low expectation of the market tells us one thing that very sharp moves are not expected. So even if some correction is due, traders should not aim for very ambitious targets. On Monday, if the high of this week, i.e. 19,867 is not breached towards the upside then this level will become the nearest resistance.

Looking at the options chain data, 19800 CE holds the highest open interest (OI), at 1.92 lakh shares. Hence, this level will be difficult to be crossed this week but I still give more relevance to 19,867 as a stronger resistance. On the lower side, 19,560 – 19,600 is turning out to be a good support area which reversed the index around 3 times in recent times. Hence traders with short positions should watch out for this level.

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