• About Us
      Asia’s 1 st LEED Platinum Rated Campus

      Asia’s 1st LEED Platinum Rated Campus

      About Us

      • Chairman's Message
      • Vice Chairman & CEO
      • Dean's Message
      • Governing Council
      • Business Advisory Council
      • Academic Advisory Council
      • Work With Us
      • Mandatory Disclosure
      • Anti-Ragging Notice

      TERM ZERO

      Media

      • News
      • Events
      • In Media
      • Media Kit

      Rankings

      Accreditations

      NIRF

      Campus

      Blog

      Annual Events

      • Convocation
      • TEDxGLIMChennai
      • L'Attitude
      • Digital Symposium
      • Sangamitra
      • Annual Alumni Meet
      • SWIM
      • IEC
      • Human Capital Management
  • Programs
      Transform and Lead

      Transform and Lead

      Full Time Programs

      PGPM

      One Year MBA for professionals with work experience

      Learn More Apply Now

      PGDM

      Two Year MBA for professionals with 0-2 years of work experience

      Learn More Apply Now

      EXECUTIVE EDUCATION

      Partner with us for customized learning solutions for your organisation

      Learn More

      Corporate Programs

      PGXPM

      Executive program for Mid & Senior Level working professionals

      Learn More Apply Now APP. Deadline: 30th August, 2020

      PGPM Flex

      Weekend management program for young working professionals

      Learn More Apply Now APP. Deadline: 30th August, 2020

      MBA in Business Analytics

      Family Enterprises Management

  • Faculty & Research
      Ranked 6th

      Ranked 6 th

      by NIRF ranking in teaching and learning among all B-Schools in the country

      Faculty

      • Full Time Faculty
      • Visiting Faculty
      • Adjunct Faculty

      Research

      • Faculty Editors
      • Papers & Journal Publications
      • Case Studies & Books
      • Conference Proceedings

      Centers of Excellence

      • Centre For Excellence in Retail Management
      • Great Lakes Centre For Management Research
      • Kotler - Srinivasan Centre for Research in Marketing
      • Centre for Excellence in Business Analytics and Business Intelligence
      • CET
      • Union Bank Centre for Banking Excellence

      Conferences

      • NASMEI
      • Financial Conference
  • Recruiters & Companies

      “Great Location for Talent. We are happy to continue visiting and having budding professionals join us and grow their careers.”

      Anil Visal

      Partner - Deloitte India

      Campus Recruitment

      • Recruitment Process
      • PGDM Class Profile 2018-20
      • PGPM Class Profile 2019-20
      • Past Recuiters
      • Student Achievements
      • Recruiters Speak

      Internships

      • Recruitment Process
      • PGDM Class Profile 2019-21
      • Live Projects

      Placement Reports

      • PGPM
      • PGDM
      • Internship Report

      Leadership Series

      • Titans Speak
      • Industry Lecture Series
      • Thought Leader Series

      Talent Listings

  • Alumni

Volatility index and Indian retail investor. By Dr. Bobby Srinivasan and Dr. Sudhakar Balachandran

September 3, 2015 | Posted by bobbysrinivasan << back to blog

In the last couple of years, the Indian stock market index has been fluctuating heavily which is partly due to similar happenings in the global stock market. However, this does not give any comfort to our retail investors as their portfolio value moves up and down with a big change. It is not unusual to see their portfolio drop by as much as 30 to 40% in a single day. The retail investor, generally is not well informed about the global events and left in a quandary and exits the market by booking the loss and perhaps never to come back again atleast for a while.

 

The following table will provide you with the India VIX close and the rate of change.

 

Date India VIX close Prev. close % change
Aug 24, 15 28.1300 17.1150 64.36
Aug 16, 13 23.6400 18.7000 26.42
Aug 05, 11 24.9000 20.2200 23.15
Jan 06, 15 17.4200 14.1525 23.09
Sept 22, 11 33.8800 27.6700 22.44
Aug 09, 11 34.8800 28.7800 21.20
Aug 29, 11 26.0700 33.2600 -21.62
May 16, 14 24.2925 36.7650 -33.92

 

 

From the table, one can see that Monday 24, August 2015 was one such day when the stock market destroyed approximately Rs.7 Lakh Crore of investors wealth. That day the index fluctuated 64.36% to close at 28.13.

 

How does a retail investor survive such volatility? Certain important observations become relevant here.

 

  1. It is said that the volatility is a friend of an investor. This is only partly true. This can happen only if the retail investor is mature enough to realise that the stock market will recover sooner or later and that he has to abide time to ride through the fluctuation. The risk taking retail investor may buy his favorite stock at a deep discount. He is essentially looking for bargains.
  2. To protect his portfolio he may take a hedging position. The moment the stock market is showing evidence of a crash he may buy a put at the money. Such action requires both confidence and money.
  3. Retail investor should as far as possible buy only shares of companies who have a steady record of high earnings, since ultimately increased earnings will drive the stock price up.

 

Finally, the stock market is not a place for a weak hearted person. Markets have dropped as much as 80% from its peak. (The Japanese index which 38500 in 1989 fell to 6000 in a couple of years and stayed there for many years). The current Indian P.E. ratio is above 20. In testing circumstances such as the Chinese devaluation, disappointing GDP numbers, the P.E. ratio could hit below 12. That means that Indian Sensex could go down substantially. It is not nice to discourage a retail investor but he or she should not enter the market not knowing the risks involved. Let us wish good luck to the poor soul.

<< back to blog

Programs

PGPM - One Year MBA for professionals with 2+ years work experience

Learn More >

PGDM - Two Year MBA for graduates with 0-2 years work experience

Learn More >

Events

Union Bank Finance Conference
Dec 17, 2020

Networking with Champions
Nov 08, 2020

Harry Kraemer on Performance with A Purpose
Oct 08, 2020
Read more

Successful Women in Management (SWIM) Lecture Series
July 05, 2020
Read more

The Great Circle Alumni Talk Series
July 04, 2020
Read more

  • About Us
  • Programs
  • Faculty & Research
  • Recruiters & Companies
  • Alumni
  • Blog
  • Contact Us