Fear index hits 20-month high as Russia launches military acti | Start Learning
Fear index hits 20-month high as Russia launches military action against Ukraine
India VIX Index hit a high of 33.97 -- a level last seen on 17 June 2020. At 10.15am, it was trading at 31.94, up 30.14% from its previous close. The VIX, which tracks investors’ perceptions of volatility for at least a month ahead, is up 107% year-to-date.
An index tracking market volatility, aka the fear index, soared more than 30 percent - hitting a 20 month high after Russia ordered military action against Ukraine.
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The volatility index typically has an inverse correlation with the benchmark Sensex and Nifty indices, both of which fell tracking global equities as Russia orders military action against Ukraine.
India VIX Index hit a high of 33.97 -- a level last seen on 17 June 2020. At 10.15am, it was trading at 31.94, up 30.14 percent from its previous close. The VIX, which tracks investors’ perceptions of volatility for at least a month ahead, is up 107 percent year-to-date.
The Nifty 50 index was down 3 percent, or 536 points, at 16,530. The BSE-Sensex was down 1,776 points or 3.1 percent at 55,455 points.
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"We are seeing the first meaningful correction in the market after a strong performance in 2021. A correction was due where geopolitical tension has become an excuse for this correction. Inflation and rising interest rates are the major concerns for equity markets and geopolitical tension is increasing the risk of inflation as energy prices are rising. Anecdotally, such kinds of geopolitical issues provide a good buying opportunity for the long-term investors and we are in a structural bull run that is likely to continue for the next couple of years where intermediate corrections will be part of this journey" said Parth Nyati, Founder - Tradingo.
Analysts say that the near 20 percent decline from the peak in NASDAQ is a clear indication of the correction that has set in. Also, the safe haven gold shooting to $1913 is a reflection of the risks arising from the crisis.
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"Markets remained in a tight range with increased volatility ahead of F&O monthly expiry and uncertain global environment. Nifty has been witnessing selling pressure at higher levels with the range shifting lower every day... While the Russia- Ukraine conflict seems to be mostly factored in by the market, other events like assembly election, commodity inflation, Fed rate hike and consistent FII selling are likely to be overhang on the market in the near term", said Motilal Oswal in a note to investors.
Analysts advise long-term investors that they should not panic and look for buying opportunities from lower levels where the domestic economy facing sectors like capital goods, infrastructure, real estate, and financials should be on investors' radar.
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