Nifty Volatility Index (NIVIX)

What is Nifty Volatility Index? 

NIVIX measures the investor's perception of the market's volatility in the near term - similar to which is similar to the S&P 500 VIX or CBOE VIX (U.S). The index depicts the expected market volatility over next 30 calendar days. 

I have analyzed below the correlation between NIVIX and Sensex to check if any downfall  or up-move in the Index and NIVIX indicate any pattern or opportunity to buy. 

Both the indexes are negatively correlated, i.e. if one rises the other will fall and vice -versa.

The comparative chart (below) is divided in 2 parts. The first is "Rising VIX and Falling Market" and second is "Falling VIX and Rising markets". 

Back in 2008 when the financial crises unveiled, the VIX reached an all time high of 85.13; there was blood on the street, i.e. people were SELLING in panic. Similarly, now when the market is calm the NIVIX is at 18. The index had touched an all time low of 17.05 in March.

So what does this all indicate?
It indicates one thing for sure, don't follow herd mentality. Don't buy now when the market has shot up and for GOD sake, please ignore the "so called experts". They will give only those calls which the general public want to hear, i.e. buy when the market is going up and sell when the market is falling. 

In the current context I would like to quote the legendary investor Warren Buffett, who said "Most people get interested in stocks when everyone else is. The time to get interested is when no one is. You can't buy what is popular and do well."

You might want to refer to my yesterdays post for more details.
Be an informed investor.

Happy Investing!!!!

Data: Bloomberg; Wealthy Opinions