India’s concern gauge logs sharpest spike since Covid shock in 2 days
The concern gauge is now at its highest degree in 10 months and analysts warn that such big jumps don’t bode properly for the markets, and any pullbacks in such instances might be momentary, till geopolitical conflicts are resolved.
The India VIX ended 23.4% greater on Wednesday at 21.14, after leaping one other 25% on Monday, within the two days after the US and Israel launched assaults on Iran on Saturday. The VIX is now at its highest degree since Could 2025. The benchmark Nifty 50 additionally ended at 24,480.50, down 1.55%, after dipping as a lot as 2.2% throughout Wednesday’s buying and selling.
Indian markets have been closed on Tuesday, March 3 on account of Holi.
CompaniesVIX CLIMBS NEARLY 50% Fairness markets prone to keep underneath stress within the close to time period and any pullback is anticipated to be momentary till conflicts are resolved, say analysts
Somil Mehta, head of retail analysis at Mirae Asset Sharekhan mentioned the current spike in volatility underscores the prevailing uncertainty and threat aversion within the markets. “An increase within the volatility index displays greater anticipated market volatility over the following 30 days, which we’re seeing because of the ongoing hostilities involving the US, Israel, and Iran,” he mentioned.
A key threat for India is from the closure of the Strait of Hormuz, a important route for world oil provides. A chronic closure may enhance India’s import invoice, gasoline inflationary pressures and set off a flight to safe-haven property akin to gold and the US greenback, which in flip, could put further stress on the rupee, Mehta mentioned.
“We’re seeing a pointy rise in volatility this week, with each the India VIX and the CBOE Volatility Index shifting greater, which displays rising geopolitical tensions and growing uncertainty throughout world markets,” mentioned Nilesh Jain, head of derivatives and technical analysis, Centrum Broking. “This might preserve equities underneath stress within the close to time period.” Within the present truncated buying and selling week, the India VIX has already moved up by over 48%, its highest degree for the reason that week of March 13, 2020, when volatility had elevated by greater than 100% after the announcement of the pandemic.
The CBOE VIX, which measures volatility primarily based on S&P 500 choices, can also be up 19% this week.
Jain mentioned with the VIX holding above 20, merchants ought to stay cautious. “Given the current gap-down openings and sharp declines, merchants could keep away from aggressive day buying and selling and enormous index positions for now,” he mentioned. “Whereas the market seems oversold, any rebound might be a short-lived aid rally till tensions ease.”
Mehta additionally advises merchants and short-term individuals to stay cautious till there’s higher readability. “Buyers could take into account hedging their portfolios by way of shopping for places for the shares, whereas merchants can use short-term pullbacks as alternatives to provoke quick positions in comparatively weaker shares or sectors, till extra readability emerges,” he mentioned.