There is a perception that US markets are more stable then the emerging markets.
Well it is not the case always.
The best barometer of volatility is the VIX index which is regarded as fear index. It is calculated from the options premium. More on this and the VIX related ETF's later.
I have compared the US VIX and Indian VIX on a normalized basis. The IN VIX has been consistently lower than the US VIX for last 9 months. In September the Indian VIX was near all time lows in IV's.
The white line is the US VIX and the red line is Indian VIX measure.
This can be attributed to better returns of Indian markets than to US markets which has seen huge swings based on bets on the economy while Indian economy has been more stable.
Also the huge FII inflows show the confidence in the Indian and other emerging markets.
Does this mean that Indian markets are less volatile than US markets? In some sense it is true while not completely.A part of it because of slightly different way calculating them but thats only a small part.
Larger picture still shows that the Indian markets have been less volatile atleast this year.
Next time I will do the same analysis using other technicl analysis volatility tools.
Well it is not the case always.
The best barometer of volatility is the VIX index which is regarded as fear index. It is calculated from the options premium. More on this and the VIX related ETF's later.
I have compared the US VIX and Indian VIX on a normalized basis. The IN VIX has been consistently lower than the US VIX for last 9 months. In September the Indian VIX was near all time lows in IV's.
The white line is the US VIX and the red line is Indian VIX measure.
This can be attributed to better returns of Indian markets than to US markets which has seen huge swings based on bets on the economy while Indian economy has been more stable.
Also the huge FII inflows show the confidence in the Indian and other emerging markets.
Does this mean that Indian markets are less volatile than US markets? In some sense it is true while not completely.A part of it because of slightly different way calculating them but thats only a small part.
Larger picture still shows that the Indian markets have been less volatile atleast this year.
Next time I will do the same analysis using other technicl analysis volatility tools.
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