VIX
Full form: Volatility Index
InvestmentsIndia VIX (IVIX) measures expected market volatility over the next 30 days, calculated from Nifty option prices. High VIX = high fear, high expected volatility. Low VIX = complacency, low expected volatility. Historically, high VIX periods (fear) are excellent long-term buying opportunities.
In detail
India VIX interpretation:nBelow 13: low volatility, complacent marketn13-18: normal rangen18-25: elevated volatilitynAbove 25: high fear (excellent long-term buying zone)nnHistorical high VIX events:nMarch 2020 (COVID crash): VIX hit 80 -- extreme fear. Nifty at 7,500. Buyers at VIX 80 earned 130%+ by end 2021.nDemonetisation 2016: VIX 25-30. Good entry.nGeneral election 2019: VIX 30+ pre-election. Excellent post-election entry.nn"Be greedy when others are fearful" -- Warren Buffett. VIX quantifies the fear level.
Formula
Real-life example
April 2020: India VIX at 65 (extreme fear). Nifty at 8,100. Contrary investor Priya added Rs 3L extra lumpsum: "VIX is screaming fear -- this is a buying opportunity." By December 2021: Nifty at 18,000. Her Rs 3L became Rs 6.7L (123% return in 20 months). VIX was the quantitative fear indicator that gave her conviction to buy in the panic.