The volatility index India VIX declined more than 15% on Tuesday, March 10, following hints of de-escalation in the US-Iran conflict and a drop in crude oil prices.
India VIX fell as much as 15.2% to 19.7975 during the session.
The volatility index reflects the market’s expectations of near-term fluctuations. Volatility is commonly defined as the rate and magnitude of price movements, and in financial markets it is often associated with risk.
India VIX indicates the extent to which the underlying index is expected to move in the near term. It is calculated as annualised volatility, expressed as a percentage (for example, 20%), based on the order book of options linked to the underlying index.
Despite Tuesday’s decline, volatility in Indian equities has risen sharply over the past month. The India VIX surged during this period as escalating geopolitical tensions and global uncertainty triggered heavy selling across markets.
Often referred to as the market’s “fear gauge,” India VIX has surged 74% over the past month, highlighting rising investor anxiety. The index has climbed 18% in the last week alone and 85% over the past three months.
The surge in volatility has coincided with a notable correction in the broader market. The Nifty 50 has fallen 7.11% over the past month, declined 3.37% in the last week, and is down 8.04% so far this year.
Heightened tensions involving the United States, Israel and Iran have amplified investor concerns in recent days, driving crude oil prices sharply higher and triggering a global risk-off sentiment.
The uncertainty led to a steep sell-off on Monday. The Sensex plunged as much as 2,994 points, or 3.2%, to an intraday low of 76,424.55, while the Nifty dropped up to 3.1% to 23,597 before recovering part of the losses later in the session.
Stock Markets Today
However, after steel sell-off on Monday, markets showed signs of recovery on Tuesday, March 10, with Indian equities opening with moderate gains following the previous day’s sharp decline.
The rebound came after oil prices dropped more than 10%, following remarks by after US President Donald Trump indicated that the ongoing conflict between the United States and Iran may be approaching a resolution. Trump told a CBS News reporter, whose comments were later shared on X, that “the war is very complete, pretty much.” He also warned that any attempt by Iran to disrupt oil shipments through the Strait of Hormuz would draw a response of “incalculable” scale. The strategic waterway handles roughly 20% of global oil supply, making it critical to energy markets.
Sensex opened 809.57 points or 1% higher at 78,375.73 while broader Nifty rose 252.75 points or 1% to 24,280.80. Broader markets outperformed benchmark indices. However, both indices later pared gains to trade around 0.6% higher.
Meanwhile, equities across Asia rebounded strongly. MSCI’s Asia-Pacific index excluding Japan rose 2.6%, recovering some losses recorded since the conflict began. Japan’s Nikkei 225 jumped 3.6%, while South Korea’s Kospi surged 6.4%.
Other Asian markets also posted gains, including Hong Kong, Shanghai, Sydney, Singapore, Wellington, Taipei, Manila and Jakarta.
Nifty 50 – Key levels to watch
According to Geogit, “the pull back that ensued without dipping much beyond the opening lows and the subsequent close above 24,000 yesterday have rekindled upside hopes. The vertical rise expected thereof today may be limited to 24,300-24,370, followed by consolidation or dips. However, a direct rise above the same could call for 25,000.”
Meanwhile, Shrikant Chouhan, Head Equity Research, Kotak Securities noted that for day traders, 24,000-23,900/77500-77200 would act as key support zones. Above this, we could see an extension of the pullback move till 24,200-24,300/78000-78300.
“On the flip side, below 23,900/77200, the selling pressure is likely to accelerate. If the market falls below this level, it could retest 23,700/76500. Further downside may also continue, potentially dragging the index to 23,500/76000. The strategy should be to reduce weak long positions between 24200/24300 levels,” he added.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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