Volatility gauge India VIX soared over 21 percent on Monday as geopolitical risks over the Russia-Ukraine crisis, along with more aggressive monetary policy moves from the US Federal Reserve wreaked the risk appetite globally.
"It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at11:30 a.m. on Monday, February 14, 2022, will be held under expedited procedures...The following items of official Board business are tentatively scheduled to be considered at that meeting: Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks," the Federal Reserve website showed.
Today's upswing points towards high volatility which means there is uncertainty in the market, said Kkunal Parar, Vice-President, Research at Choice Broking. India VIX could run up to 24 points by Tuesday, he added.
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The Fed emergency meet and Ukraine issue have activated panic mode in the market, which has led to a selling rout in both global and domestic markets, Parar explained.
Mark Matthews of Bank Julius Baer & Co said on Monday that he expects a 25 basis points hike in the key rate by the Fed in March.
On geopolitical issues, “The Federal Reserve and inflation; unfortunately, we will have to wait until around the summer to see tangible evidence that the inflation is coming down, which I believe we will barring Russian invasion of Ukraine,” he said.
Nifty50 and Sensex slid more than 2 percent today. At 1347 IST, the former was at 16999.95, falling below the crucial 17,000 mark, and the latter was at 56902.15. India VIX index was up 15.7 percent at 21.6 points.
The spike in the gold price, dollar index recovering from lower levels and today's jump in volatility gauge are indicators of risk-off sentiment, said Arpan Shah, Senior Research Analyst at Monarch Networth Capital. Shah added that in case geopolitical tensions escalate, the fear gauge could climb even higher towards 24 levels.
First Published: Feb 14, 2022 2:39 PM IST
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