A trader reacts while working in a brokerage house in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg News)

Indian Stocks Volatility Surges to Highest Level in 2 1/2 Years

(Bloomberg) -- Indian stocks are still holding on to gains for the year, but they’re evaporating fast.

Exit polls last week from state elections were the latest hit to the market, sending the S&P BSE Sensex Index down as much as 1.8 percent on Monday, the most intraday since Oct. 19. The results showed that Prime Minister Narendra Modi’s party is set for tight electoral contests in key states before next year’s general election, adding to uncertainties in a market already hurting from fluctuating oil prices and defaults at an infrastructure financier.

The result is clear: Volatility for the Indian stock benchmark has risen, reaching levels not seen since May 2016.

While the month is still young, the Sensex is heading for a 2.9 percent December decline -- that would mark its biggest slide to end a year since 2014. The gauge, which in August was up 14 percent for 2018, has pared its advance to only 3.1 percent. The NSE Nifty 50 Index briefly erased its 2018 gain after falling as much as 1.9 percent on Monday.

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