India’s VIX Index Drops as Stocks Fall for Second Day on Banks

India’s benchmark gauge of options declined as stocks fell for a second day, paced by a retreat in banks.

The India VIX index, a measure of protection against stock-market swings, fell 2 percent to 15.20 at the close in Mumbai for its biggest drop in a week. The CNX Nifty Index slid 0.6 percent to 8,634.65 after rising as much as 1.2 percent earlier on Thursday. The 12-member CNX Bank Nifty Index tumbled 1.8 percent, erasing a 1.2 percent intraday advance.

“The outlook for volatility is very tricky to predict” as we approach the end of the current fiscal year on March 31, Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt., said in a phone interview. Banks fell amid concern about pressure on their net interest margins because of falling interest rates, he said.

The Reserve Bank of India has lowered interest rates twice so far this year after a slump in oil prices helpled ease inflation. Indian stocks advanced earlier on Thursday, mirroring gains for Asian equities, after Federal Reserve officials cut estimates for where the benchmark U.S. interest rate will be by the year-end. The Nifty has dropped 3 percent so far in March, paring its advance this year to 4.3 percent.

Foreign investors have bought $5.3 billion of local stocks in 2015, the most among eight Asian markets tracked by Bloomberg. The Nifty trades at 16 times its earnings projected over the next 12 months, compared with 11.9 times for the MSCI Emerging Markets Index.

Indian equity futures and options expire on the last Thursday of every month.

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