4 Jun 2020 ● 01:05 PM
The India VIX spiked to 75 in Jan 2008 when the Nifty fell 30% in days, and then it went down all the way to 20 in the next few months before the market was ready to break the Jan low of 4448 on the Nifty. So are you surprised that the India VIX is falling from 80 to 30 over the last 2 months. And what stops it from going back to 20?
The second chart here shows you that the India Vix goes back to 83 in Oct 2008 in the final crash of that bear market. But as the market was making a double bottom it went back to 29 in the next 5 months. The market took off to the upside then from a reading of 29.
So this years 40% crash in the Nifty pushed the India VIX to 86 and from there we dropped to 26 recently and have been near 29-30 for days as bank nifty below made a double bottom over 2 months and started to rally.