The fear gauge is now at its highest level in 10 months and analysts warn that such huge jumps do not bode well for the markets, and any pullbacks in such times could be temporary, until geopolitical conflicts are resolved.
The India VIX ended 23.4% higher on Wednesday at 21.14, after leaping another 25% on Monday, in the two days after the US and Israel launched attacks on Iran on Saturday. The VIX is now at its highest level since May 2025. The benchmark Nifty 50 also ended at 24,480.50, down 1.55%, after dipping as much as 2.2% during Wednesday’s trading.
Indian markets were closed on Tuesday, March 3 on account of Holi.
VIX CLIMBS NEARLY 50% Equity markets likely to stay under pressure in the near term and any pullback is expected to be temporary until conflicts are resolved, say analysts
Somil Mehta, head of retail research at Mirae Asset Sharekhan said the recent spike in volatility underscores the prevailing uncertainty and risk aversion in the markets. “A rise in the volatility index reflects higher expected market volatility over the next 30 days, which we are seeing due to the ongoing hostilities involving the US, Israel, and Iran,” he said.
A key risk for India is from the closure of the Strait of Hormuz, a critical route for global oil supplies. A prolonged closure could increase India’s import bill, fuel inflationary pressures and trigger a flight to safe-haven assets such as gold and the US dollar, which in turn, may put additional pressure on the rupee, Mehta said. “We are seeing a sharp rise in volatility this week, with both the India VIX and the CBOE Volatility Index moving higher, which reflects rising geopolitical tensions and increasing uncertainty across global markets,” said Nilesh Jain, head of derivatives and technical research, Centrum Broking. “This could keep equities under pressure in the near term.” In the current truncated trading week, the India VIX has already moved up by over 48%, its highest level since the week of March 13, 2020, when volatility had increased by more than 100% after the announcement of the pandemic.
The CBOE VIX, which measures volatility based on S&P 500 options, is also up 19% this week.
Jain said with the VIX holding above 20, traders should remain cautious. “Given the recent gap-down openings and sharp declines, traders may avoid aggressive day trading and large index positions for now,” he said. “While the market appears oversold, any rebound could be a short-lived relief rally until tensions ease.”
Mehta also advises traders and short-term participants to remain cautious until there is greater clarity. “Investors may consider hedging their portfolios via buying puts for the stocks, while traders can use short-term pullbacks as opportunities to initiate short positions in relatively weaker stocks or sectors, until more clarity emerges,” he said.
