Decoding Fluctuations: The Factors Behind Volatility in the Indian Market
Indian market has been experiencing huge volatility in 2024, VIX which is a volatility index that measures the implied volatility of Indian stock market which surges nearly 35 % in May. When the VIX is high volatility is high, which is usually accompanied by market fear, big players like FIIs and DIIs are not sure to bet the market in this condition.
Major reason for volatility: There are four major reasons of volatility which expert believes.
FIIs selling: The major reason behind the instability in indian market is due to huge off loading by FIIs because they generally don't do fresh investment before election as well as Federal Reserve also decided to delay rate cut which may effect the global economy.
Pre Elections jitters: Another reason could be upcoming Lok sabha elections and market already discounted the return of the current government but the question is how smoothly and by what margin they can secure a majority in these elections.
Premium valuation: Indian market is already trading at a premium valuation, As per motital oswal nifty 50 is trading at 12 months forward PE of 19.5 times.
No fresh trigger: Experts say the Indian stock market has discounted several positives, such as the robust growth of the domestic economy, anticipated Federal Reserve rate cuts by year-end, and political stability post-elections