Depending on whether the Prime Minister Narendra Modi-led NDA surpasses or falls short of the expectations outlined by exit polls, the Nifty could experience significant swings in either direction once the trends of the Lok Sabha election results become apparent on Tuesday. The substantial rally of over 3% on Monday, coupled with a 15% decline in the India VIX fear gauge, indicates that market anticipation for a negative surprise has diminished.
Option traders would do well to note that VIX usually rises in the fortnight ahead of Budget, with last year seeing a 66% rise during the same period, only to see a steep fall in VIX, post Budget, Anand James of Geojit said.
Since the budget announcement comes soon after the Fed policy meeting on January 31, the market reaction for the next few weeks will be from a combination of the two. Let s understand how traders should position themselves for the budget day.
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