India’s VIX Drops for First Time in Five Days as Stocks Rebound

India’s gauge of equity-option prices fell for the first time in five days as stocks rebounded from their longest losing streak in 15 months.

The India VIX Index, a measure of protection against stock market swings using options, fell 3.7 percent to 21.19 at the close in Mumbai. The 50-stock Nifty Index added 0.5 percent to 8,565.55, its biggest advance in two weeks, as some investors judged the recent selloff to be excessive.

The VIX declined from Monday’s close at an eight-month high after exit polls for Delhi state elections signaled a setback for Prime Minister Narendra Modi’s party. The Nifty has risen 4.1 percent in 2015 amid expectations Finance Minister Arun Jaitley will unveil growth-boosting proposals in the federal budget, due on Feb. 28.

“Volatility has declined after the Delhi election event is over, but it’s going to remain elevated as we head toward the federal budget,” Sahaj Agrawal, a vice president of derivatives at Kotak Securities Ltd., said in a phone interview from Ahmedabad in western India. “We see a trend reversal, if the Nifty crosses 8,700.”

Foreign investors bought $96.3 million of CNX Nifty Index options on Monday, data compiled by Bloomberg show. They sold $6.7 million of local stocks on Friday, paring their purchases this year to $2.8 billion, still the second-highest among eight Asian markets tracked by Bloomberg.

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