In an unusual pattern, India’s stock gauge moves in sync with volatility index for days
The NSE Nifty 50 Index has lost 14% from its peak in September as investors grew skeptical of the market’s steep valuations, with corporate earnings and economic growth starting to disappoint. In recent days, the India NSE Volatility Index also slid, on falling demand for options betting on moves in the benchmark equity gauge, which comprises mostly India’s heavyweights.
“The lack of hedging signifies expectations of more stability in large-cap names,” said Sonam Srivastava, founder and chief executive officer at Wright Research in Mumbai. She added that bigger stocks may fare better should the market fall further, and that her company last week switched to hedges on mid-cap stocks rather than the Nifty 50.
Smaller and mid-cap shares have tumbled more than the broader market since the Sept. 26 high, with Nifty gauges tracking them down more than 18%. While investors have so far remained largely bearish, some firms have turned positive recently.
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