India VIX Declines From Seven-Week High After S&P Raises Outlook

The benchmark gauge of Indian option prices fell from the highest level in seven weeks after Standard & Poor’s raised the country’s credit rating outlook to stable from negative.

The India VIX lost 2.8 percent to 12.9 at the close in Mumbai, after rising as much as 11.5 percent earlier in the day. The drop pared the gauge’s weekly increase to 8.8 percent, the most in three months. S&P maintained its rating on Asia’s third-largest economy at BBB-, the lowest investment grade, and said it could raise the rating if economic growth quickens and fiscal, external or inflation metrics improve.

“The outlook raise will lead to more inflows which will boost stocks,” Jitendra Panda, managing director and chief executive officer at Peerless Securities Ltd., said by phone today. “We advise buying the Nifty 8,100 calls.”

The underlying Nifty climbed 0.7 percent to 7,968.85, paring a weekly decline to 1.9 percent. The gauge has risen 26 percent this year as foreigners bought $13.9 billion of shares, the most among eight Asian markets tracked by Bloomberg, on bets Prime Minister Narendra Modi will help revive an economy growing at close to the slowest pace in a decade.

The Nifty is valued at 14.9 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 10.9.

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