Volatility continues to cool, India VIX falls 6% intraday as investors turn bullish

The Nifty 40 has been oscillating within a 24,500-25,000 range over the past month.

Caution in the markets, as indicated by the India VIX index, continued to taper off, sinking over six percent in trade on Friday, June 20, as Dalal Street rallied sharply.

At 2.10 p.m., the India VIX gauge, which measures expected volatility in markets based on options trading, fell 4,2 percent to 13.66, under the 14 mark. The India VIX index has cooled off 22 percent in one month.

The Sensex was up 840.67 points or 1.03 percent at 82,202.54, and the Nifty was up 252.90 points or 1.02 percent at 25,046.15. About 2,157 shares advanced, which indicated that the market breadth was in favour of the bulls, 1251 shares declined, and 113 shares unchanged.

With the index trading below the critical threshold of 15, this signals reduced volatility and suggests that market fear is waning. This typically acts as a positive indicator, reflecting growing investor confidence and increasing the likelihood of the uptrend continuing, noted experts.

Overall, the outlook remains cautiously optimistic, supported by strong institutional flows and improving global cues.

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"Nifty which has been trading within the 24,500-25,000 range for about a month now is likely to remain within this range in the near-term. The upper side of the range will be broken only on news of deescalation of the Israel-Iran conflict or an abrupt end to the war, " noted VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

There is uncertainty on this. The lower side of the range is unlikely to break since big buying, particularly by domestic institutions, will emerge on dips. If the war lingers and crude rises beyond $85 the lower band of the range will be broken.

"We believe, as long as the market is trading between 24,700 and 24,900, range-bound activity is likely to continue. On the higher side, a successful breakout above 24,900could take the market to 25,000-25,050. On the other hand, breaking out of 24,700 could increase the selling pressure. Below this level, the market could retest the levels of 24,500–24,475," said Shrikant Chouhan, Head Equity Research, Kotak Securities.

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