Volatility index at 2-week high as rally spurs protection demand

India's benchmark gauge of protection against stock-market swings rose to a two-week high amid an advance in the CNX Nifty Index to an all-time high. The India VIX or volatility index, jumped 3.3 per cent to 13.7 in Mumbai, the highest level since October 20. The Nifty added less than 0.1 per cent to a record 8,324.15 at the close, after rallying for a sixth straight month in October.

"When you are in an all-time high zone, you have no idea where the market will go," Vineet Bhatnagar, managing director of PhillipCapital India Pvt., said in an interview to Bloomberg TV India on Monday.

"Bulls seem to have got hold of the market but the Nifty may face resistance at 8,450 levels." Foreign investors bought $274 million of index options October 31, a ninth straight day of purchase. They invested $310.5 million in stocks on October 31, the highest since August 7. That extended this year's net inflow to $14 billion, the most among eight Asian markets tracked by Bloomberg.

The Nifty rose 4.5 per cent in October, the biggest monthly advance since June, as Prime Minister Narendra Modi ended price controls on diesel, raised natural-gas costs and moved closer to ending the state's monopoly on coal mining.