India VIX Sees Biggest Budget-Day Fall In Nine Years

The India Volatility Index (VIX), often described as investors’ fear gauge, declined about 17 per cent to 13.97 on Wednesday. For a budget day, this is the biggest intra-day drop in 9 years and the sharpest since the index was introduced in April 2008.

It was also the steepest fall for the index since May 16, 2014 when the Narendra Modi government came to power.

VIX had gained 11 percent in three sessions ahead of Budget 2017-18 from 15.17 to 16.82.

As volatility declined, Nifty gained 1.81 percent, its biggest intra-budget day jump since the India Volatility Index was introduced.

What has led to the sharp drop in volatility? Certainty.

• No change or withdrawal of exemptions in the long-term capital gains tax
• Adherence to fiscal commitment
• Exemption to category I and II foreign portfolio investors from tax on indirect transfers.

All these factors worked in the market's favour.