India’s benchmark gauge of equity-option costs fell for the first time in six days as stocks rallied the most in a week.
The India VIX index fell 2.5 percent to 17.02 at Thursday’s close in Mumbai. The CNX Nifty index rose 0.1 percent to 8,355.85, the most since Aug. 6. Global investors bought $426 million of index options on Wednesday, a ninth day of net purchases, according to data compiled by Bloomberg.
Consumer prices in India climbed 3.78 percent from a year ago in July, compared with analysts’ forecast for a 4.4 percent increase, adding pressure on Governor Raghuram Rajan to lower rates. China’s move on Tuesday to devalue the yuan triggered a sell-off in global markets and raised bets that developing nations will weaken their currencies to stay competitive.
“The India VIX may resume its up move after a small dip as the yuan devaluation has sent the cat among the pigeons,” Sanjiv Bhasin, executive vice president at India Infoline Ltd., said in a phone interview from New Delhi. “We advise selling the rallies rather than buying the fall as a theme for the second half of August.”
There’s no basis for the yuan’s depreciation to persist and the central bank is capable of keeping the currency at an equilibrium level, People’s Bank of China Assistant Governor Zhang Xiaohui said Thursday at a briefing in Beijing.
Rajan maintained borrowing costs at a review this month to curb Asia’s third-fastest inflation even as the government has pressured him to cut rates, among the highest in the region.
Nifty put options with an exercise price of 8,200 were the most popular by number of outstanding contracts. Among calls, the 8,700 contracts had the highest open interest.