Navigating Market Volatility Using the MOVE Index | NIFTY 50
How To Navigate This Nifty-50 Crash | Part 2 – Focus On The “Move” Index
Equity markets here in India are going through one of the most volatile phases of recent times. It started off with the Federal Reserve in the US starting its most recent rate cut cycle on 18-Sept-24 with a big bang 50 basis points cut on 18-Sept-24, and equity markets around the world, including the NIFTY-50 Index in India cheering the start to rate cuts in the US with very strong rallies. The NIFTY-50 hit an new all-time-high on 26-Sept-24. However, since then, there’s been a dramatic reversal in the fortunes of the NIFTY and the NIFTY has corrected by almost 8% from its most recent all-time-high. It’s been almost one and a half months since the on-going bout of volatility in equity markets started in the first week of Oct-24. And yet there are no signs that we are anywhere near the close to the end of this volatile phase.
In the meantime, we witnessed the historic victory of Donald Trump in the recently concluded presidential election in the US – something that has led to very strong rallies in US equity markets. But Trump’s victory has so far failed to bring any respite for Indian markets and the NIFTY continues to be gripped by a very elevated level of volatility.
In Part 1 of this series, we tried to examine is there are parallels in history to the kind of volatility that the NIFTY is witnessing right now, and we found that the way the NIFTY has trended since the start of rate cuts in US may NOT be as unprecedented after all. We saw in Part 1 how there are striking similarities between the NIFTY’s broader trend in recent weeks and how the NIFTY trended exactly 17 years back in the aftermath of the start of rate cuts in the US in Sept-2007. If you have NOT watched Part 1 of the series, then please do first watch this video: “How to Navigate this NIFTY-50 Crash? | Don’t Worry, This Too Shall Pass (Part – 1)”
In Part 2 of this series, I have tried to explore the key factor/s that are driving the current bout of volatility in equity markets in India right now, and also provide a data-driven explanation as to why equity market necessarily tend to become volatile once the Fed starts to cut rates. Furthermore, I have also tried to explain how the “MOVE” Index, which tracks volatility in US government bond market can potentially play a pivotal role in helping investors navigate the equity markets during course of this on-going phase of volatility in equity markets. So do watch this video till the end.
Do watch the full video on”How to Navigate this NIFTY-50 Crash? | Part 2 – Navigating market volatility using “MOVE” Index”
