The National Stock Exchange (NSE) on Monday started disseminating its volatility index on a real-time basis, instead of just at the end of the day.
The volatility index, called the India VIX, indicates investors’ perception about volatility in the near term. The index shows the expected market volatility over the next 30 calendar days.
Higher the India VIX values, higher the expected volatility, and vice versa. In a statement, NSE said it would seek a nod from the Securities and Exchange Board of India (Sebi) to start derivatives on the volatility index after it had been tracked for a suitable period.
“Once India VIX is available for trading after regulatory approvals, it will give a lot of security to investors and traders, who face uncertainty, because the new product will empower them with better information and foresight,” said Ravi Narain, MD and CEO of NSE. “More importan, it will give them the ability to use the product to hedge their portfolios against the risk arising out of volatility,” he added.
