India VIX cools 17% after 52% spike amid US-Iran war
What's the story
India's volatility index (VIX), the barometer of stock market fear, has witnessed a major correction on Thursday. The index fell by 17%, offering investors some relief after a massive 52% spike over two trading sessions. The surge was triggered by escalating tensions in the Middle East, particularly between Iran and Israel. Despite this pullback, experts recommend that traders remain cautious and hedge their portfolios until more clarity emerges on the situation.
Market impact
Iran-Israel conflict rattles global markets
The recent spike in India VIX was the steepest since the first COVID-19 lockdown six years ago. It came after a wave of US and Israeli attacks on Iran and Tehran's counter-offensive, which shook global markets. The index currently hovers around 18.8, indicating that uncertainty still looms over the market. Hariprasad K, SEBI-registered Research Analyst and founder of Livelong Wealth, said if positive global momentum sustains, a sharp cooling in VIX could occur leading to a decline in option premiums.
Market recovery
Sensex gains over 400 points, rupee strengthens
On Thursday, Indian equity benchmarks staged a strong comeback with the Sensex surging 900 points to close at 80,015. The Nifty also reclaimed the 24,700 mark. This recovery was largely due to hopes of a potential de-escalation in the ongoing Iran-Israel-US conflict and other supportive cues. The positive momentum was mirrored by the Indian rupee which opened 0.63% stronger at ₹91.57 against the US dollar after falling to ₹92.16 yesterday, breaching its previous all-time low of ₹91.9875 in late January.