India VIX index hits a new 52-week high

The ongoing Russia-Ukraine war has added to the already heightened volatility in the Indian stock markets with the India VIX index hitting a new 52-week high on Thursday. The barometer gained over 27 per cent during the day to touch 33.97.

The India VIX index is often looked upon as a barometer of near-term volatility in the Indian markets and though it is yet to gain a following like that of Chicago Board Options Exchange's Volatility Index, it is widely followed by traders and investors.

During the afternoon session, the India VIX cooled down a bit and was hovering around 30-31 levels, which is still 25 per cent higher than Wednesday’s close of 26.66.

The rise in volatility can also be gauged from the fact that the index has more than doubled in the last six months – it has jumped 133 per cent from around 13 in August last year. If one takes into account the year-to-date, the barometer is up nearly 87 per cent.

Interestingly, the surge in the India VIX has been much higher than the rise in CBOE’s VIX index. The US-based index is up a little over 80 per cent in the last six months while the year-to-date jump is pegged at 87 per cent.

Back in India, the volatility index may well have gained a lot in the last few months but it is still miles away from its all-time high of around 70, which was touched in March 2020 when the country was facing a nationwide lockdown following the COVID pandemic.

The next five months, however, saw the India VIX falling to below 20 even as COVID concerns continued unabated but the markets were in the midst of a strong upswing with investors getting into buying mode on the back of huge correction and strong long-term outlook.