India VIX up 68% despite over 7% Sensex Nifty rally
India's market volatility index, the India VIX, shot up by 68% in just three weeks, jumping from 10.5 to 17.5, even though big indices like Sensex and Nifty actually climbed over 7% during that time.
Meanwhile, smaller stocks didn't fare as well, with mid-cap and small-cap indices dropping around 3% and nearly 4.6%.
Experts cite faster rally, short covering
Experts say it's a mix of things: Rohit Srivastava, founder of Strike Money and Indiacharts, points out that "If the market rises faster than expected, the VIX can also move higher," while Chandan Taparia, head of technical and derivatives research at Motilal Oswal, highlights short covering in derivatives as another reason.
Plus, foreign investors cut their short positions in Nifty futures dramatically, from 280,000 to nearly 106,000 contracts, which shook up option prices and added to the market's jumpiness.