Fears are now at their highest level in 10 months and analysts warn that such big jumps do not bode well for markets, and any pullback in such times may be short-lived, until geopolitical tensions are resolved.
India’s VIX rose 23.4% on Wednesday to end at 21.14, after another 25% rise on Monday, two days after the US and Israel launched strikes on Iran on Saturday. The VIX is now at its highest level since May 2025. The benchmark Nifty 50 also ended 1.55% lower at 24,480.50 after sinking as much as 2.2% during Wednesday trade.
Indian markets were closed on Tuesday, March 3 due to Holi.
InstitutionsAnalysts say the VIX is close to 50% with equity markets likely to remain under pressure in the near term and any rebound is expected to be short-lived until the conflict is resolved.
Sumil Mehta, head of retail research at Mirai Asset Sherkhan said the recent spike in volatility reflects the uncertainty and risk aversion in the markets. “The increase in the volatility index reflects higher expected market volatility over the next 30 days, which we see due to ongoing hostilities, including in the United States, Israel and Iran,” he said.
A major risk for India is the closure of the Strait of Hormuz, an important route for the world’s oil supply. A prolonged shutdown could increase India’s import prices, fuel inflationary pressures and trigger a flight to safe havens such as gold and the US dollar, in turn putting additional pressure on the rupee, Mehta said.
“We are seeing a significant increase in volatility this week, with India’s VIX and CBOE Volatility Index both moving higher, reflecting heightened geopolitical tensions and uncertainty in 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 subdued trading week, India’s VIX is already up more than 48%, its highest level since the week of March 13, 2020, when volatility surged more than 100% after the pandemic was announced.
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 opening and sharp decline, traders may avoid day trading and major index positions for now,” he said. “While the market is oversold, any rebound may be a short-term relief rally until the pressure eases.”
Mehta also advises traders and short-term investors to remain cautious until there is more clarity. “Investors may consider protecting their portfolios by buying stocks, while traders may use short-term pullbacks as opportunities to initiate short positions in relatively weak stocks or sectors, until more clarity emerges,” he said.
