Volatility index needs to come down below 25 level for some stability: Rajat Bose

Rajat Bose, rajatkbose.com in an interview with ET Now talks about the market outlook.

Would you say that we are somewhere near the Lehman era, the fact that volatility is continuing to remain at such high levels?

In that case, I will take you to the Lehman era when volatility started going up in 2008. Right from May onwards in 2008, the NSE India VIX started moving up in a big way and it picked in the month of October-November when it went up as high as 80-85 levels.

The problem is that once or twice it is going up to 80-85 levels, that does not mean much but on a persistent basis if this index is actually hovering above 30, that means at higher levels, you do not see any confidence and selling comes.

For instance today the prices are moving up but the moment you reach level of 5150 to about 5167 (major resistance area) again selling comes in. Smart money is actually distributing stocks and there could be a big sell off once this distribution phase is through. That is the fear because this volatility index needs to come down to below 25 level to show some stability.

You must have seen when the market was going up 2010, the volatility index never used to move beyond 22-25 range. So I am slightly apprehensive on this count. I expect VIX to come down.