INDIA VIX and Stock Markets are inversely proportional. But there are exceptions – like this General Election 2024.
General elections will be held in India from 19 April 2024 to 1 June 2024 to elect the 543 members of the 18th Lok Sabha. The elections will be held in seven phases and the results will be announced on the 4th of June 2024.
Markets have high expectations that NDA led by current Prime Minister Mr. Modi will again win the elections and come back to power – and chances are high that NDA will win again. Therefore as you can see in the last year NSE kept rising.
And this may happen till the 4th of June 2024. This means both INDIA VIX and Indian Stock Markets will rise. Thus the INDIA VIX and Indian Stock Markets moving inversionally proportional to each other rule may not apply.
NSE 03-Apr-24
In that case at least till the 4th of June 2024 – when the election results will be out – Nifty may not fall much. Even if it does – like recently, it will quickly come up. That doesn’t mean you start buying Nifty or Stock Futures because whatever I say is an assumption – but a highly likely assumption.
In a situation such as this, no technical analysis will work. Panic trading will start increasing as the elections will approach. This will lead to an increase in INDIA VIX. Volatility increase will lead to swift movements in stocks and indices. This will lead to profit / stop loss hitting faster than normal times.
What you can do as a trader?
Until the 4th of June 2024 trade very cautiously. Hedge your trades and reduce the lot size. Reducing the lot size for the next 2-3 months will not make you poor even if you are a good trader. And if you are a bad trader, reducing the lot size will reduce your losses.
Hedging the trades reduces the chances of losses and increases the chances of profits. By doing my Nifty and Banknifty course you learn proper hedging. My course details are here.
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