Indian stock market volatility fell over 22% on Monday as the stock markets welcomed the exit polls result that showed policy continuity by the incumbent government. The markets' fear gauge, India VIX, fell as much as 22.3% in early trade to 19.11 and was down 20% at 19.5.
The fall comes after the benchmark indices — Nifty and Sensex — surged to a fresh recid high. As of 9:30 a.m., the S&P BSE Sensex was 2,022 points, or 2.73%, up at 75,984, while the NSE Nifty 50 was 611.6 points or 2.71% higher at 23,142.
Intraday, Nifty surged 2.59% to a fresh high of 23,338.7 while Sensex rose 3.76% to a new high of 76,738.8.
The ongoing Lok Sabha elections have marked the highest volatility experienced by the Indian stock market in history. Since the commencement of phase 1 on April 20, the volatility gauge has surged by approximately 80%, surpassing the previous high of 49% recorded during the 2014 elections.
This spike is consistent with India VIX's typical behaviour before major events. However, compared to the last three election periods, the current VIX level is significantly lower than the historical trend, according to Vaibhav Porwal, co-founder of Dezerv.
"As we approach the result day, we anticipate a further increase in the VIX, followed by a decline post-election, reflecting the patterns observed in previous election cycles," he said.
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