Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

Claim this guide to see
how we identify high potential
smallcap opportunities for you




**Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
**By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.

AD

What is Volatility in Stock Market?

There are two ways in which one can learn about what is volatility in the stock market. Let’s take a look at the confusing one first and try to understand what volatility is in technical terms.

Volatility in the stock market is all about the standard deviation of the stock market returns from the mean.

The standard deviation of a stock’s annualized returns over a given period shows the range which further tells if the company’s stock price may increase or decrease.

Now let’s simplify the above statement in layman’s terms.

For example, if the share price of Infosys goes rapidly up or comes down quickly in a short time-range, it is said to have high volatility.

Vice versa, if the share price of TCS moves up or comes down slowly and stays stable, it is said to have low volatility.

High volatility should not be a worry if you are a long-term investor.

Volatility in the stock market is an important indicator and it helps estimate the fluctuations that may happen in a short period of time.

While volatility may seem like a bad thing to you, it often provides profitable opportunities. If an investor believes the market volatility is low, it will help him buy additional stocks of fundamentally strong companies for the long run.

If the volatility is high, an investor can simply exit his/her positions for the short term and wait for a better entry price.

We all know that timing the stock markets is no easy task, and it is impossible to say for sure where the markets may head next.

This is when volatility comes handy and traders with the help of decoding volatility in the stock market, prepare strategies, which may or may not work.

In India, the India VIX is a volatility index based on the NSE Nifty index. Here, a volatility figure (%) is calculated which indicates the expected market volatility over the next 30 days.


Infosys vs HDFC Bank: The 10 Year Bet?

May 8, 2023

Even a genius mathematician had once been a victim of such market volatility.

What Infosys and HDFC Bank Results Don't Tell You

Apr 19, 2023

Even a genius mathematician had once been a victim of such market volatility.

5 Ways a Weaker Indian Rupee Benefits You...and Hurts You

Sep 29, 2022

A falling rupee doesn't mean you need to suffer in silence. There are ways to profit from it too.

Should You Look at NAVs When Investing in Mutual Funds

Aug 5, 2022

Buying into a mutual fund just because its NAV is low, is a meaningless exercise.

These 5 Pharma Stocks Rally Up to 85% in 2022. Multibaggers in the Making?

Jul 11, 2022

Despite the volatility, these five pharma companies have almost turned multibaggers and delivered substantial gains. Find out what's driving them.

Why SRF Share Price is Falling

Jul 7, 2022

SRF shares are down more than 12% in the last 5 days. On a YTD basis, the specialty chemical company has fallen 16%.

What Tiggers a Sell Call? This is the Process I Use

Jun 23, 2022

Find out the indicators I use to Sell.

What the Interest Rate Hike Means for Traders

Jun 20, 2022

How should you trade the market now? Find out in this video...

The Perfect Smallcap for Uncertain Times

Jun 7, 2022

It's not the time to be either fearful or greedy, but highly selective.

Amazon's Investment in Vodafone Idea: What it Means for Investors...

May 31, 2022

Insights into the recent developments surrounding Vodafone Idea-Amazon investment.

This is the Biggest Risk to the Stock of M&M

May 3, 2023

The risk is far bigger than just volatility in quarterly earnings and valuations.

What Bajaj Finance's Record Profits Mean for Investors...

Jan 31, 2023

It is natural to assume that a company that has BNPL at its core can flounder. But Bajaj Finance proves us wrong.

5 Stocks that Could Announce Big Buybacks in 2022

Aug 18, 2022

Buybacks could mean an improvement in financial ratios such as earnings per share, return on assets, and return on equity (ROE).

5 Stocks Paying Out Dividends this Week

Aug 2, 2022

Even a dividend paying stock with the best track record is subject to severe volatility from time to time.

Big Business Houses Hit Hardest by Stock Market Collapse... (This Will Surprise You)

Jul 8, 2022

Here's how the volatility of 2022 has impacted the mammoth money makers of India.

Is the IPO Market Dead? Here's How to Plan Your IPO Investments...

Jun 29, 2022

Here's why the IPO activity in India has slowed down.

Tata Group Stocks: Biggest Gainers and Losers so far in 2022

Jun 22, 2022

Here's how Tata Group stocks have performed amid the volatility in the market.

5 Fundamentally Solid Companies Near 52 Week Lows. Has the Market Got it Wrong?

Jun 8, 2022

Amid the current volatility, many stocks have hit their 52-week lows, despite strong fundamentals.

The Stock Market is Recovering. Here's What You Should Do...

Jun 5, 2022

The volatility has eased over the past few days. But is there is a possibility of some negative news derailing the Covid recovery joyride?

Why KRBL Share Price is Falling

May 31, 2022

Here's why the stock has such a volatility bout in the past few months.