India VIX Declines 1.72% on Selling Pressure from FIIs, Oil and Global Risk Factors Drive the Session

Mumbai, Sept 30: India VIX opened at 13.41 and was at 13.18, a decline of 0.23 points or 1.72%, as of 10:03 IST on Wednesday. During the opening of the session the volatility index ranged between 12.77 and 13.86, while the Nifty 50 opened at around 22,712. The session came following heavy foreign institutional selling, higher crude oil prices, geopolitical uncertainty and mixed global market signals. 

India VIX at 13.18 as Volatility Eases 1.72% 

India VIX, which measures expected volatility in the Nifty 50, opened at 13.41, unchanged from its previous close, before moving to 13.18 by 10:03 IST. The index recorded a day high of 13.86 and a day low of 12.77, giving it an intraday range of 1.09 points during the opening session. 

The index had closed at 13.41 on September 29, after touching an intraday high of 14.77. The Nifty 50 closed the previous session at 22,716.20, down 0.28%, after declining as much as 0.9% during the day. India VIX has a 52-week high of 28.90 and a 52-week low of 8.72, while its year-to-date return stands at 39.14%. 

Nifty Opens Mixed as 12 Sectors Gain 

The domestic market opened with a mixed signal on Wednesday, with the Nifty 50 around 22,712 and the Sensex around 72,598. The Nifty was marginally lower at the opening, while the Sensex was slightly higher. 

The broader market did not record a fresh broad-based decline during the opening phase. Twelve of 16 major sectors were higher, while mid-cap and small-cap indices also gained. The movement came as domestic institutional buying provided support against continued foreign selling. 

The relatively stable opening followed a volatile September series, during which the Nifty declined around 6.7% and the Bank Nifty fell approximately 5.7%. 

FII Selling Nears ₹10,000 Crore and Raises Volatility 

Foreign institutional selling remained a key domestic market factor entering Wednesday’s session. Foreign investors sold approximately ₹9,980 crore of Indian equities on Tuesday, marking their largest outflow in about four months. September’s cumulative foreign selling stood at roughly $2.7 billion, while year-to-date selling reached around $26.75 billion. 

The previous day’s data showed FII selling of ₹9,980.22 crore, compared with domestic institutional buying of ₹6,952.71 crore. The difference between foreign selling and domestic institutional purchases formed an important feature of the opening market conditions. 

The domestic institutional purchases provided support after the heavy foreign outflow, while the Nifty avoided a major gap-down opening on Wednesday. 

DII Buying Near ₹7,000 Crore Supports Market Opening 

Domestic institutional investors bought approximately ₹6,952.71 crore of Indian equities on Tuesday, partly absorbing the foreign selling pressure. 

The contrasting institutional flows came after a difficult September for Indian equities and ahead of the new derivatives series. Foreign selling continued to remain a feature of the market, while domestic institutional purchases provided buying support during the opening session. 

For India VIX, the opening market therefore developed against two opposing flows: heavy foreign selling and sizeable domestic institutional buying. 

US-Iran Tensions Keep Geopolitical Risk Elevated 

Geopolitical uncertainty surrounding the US-Iran situation remained a global factor influencing market conditions on Wednesday. The absence of progress on a US-Iran peace deal continued to weigh on broader risk sentiment, while the geopolitical situation remained connected to foreign flows into Indian equities. 

The situation also remained relevant to crude oil prices and global financial conditions. The combination of Middle East uncertainty, commodity prices and foreign portfolio flows remained part of the market backdrop as India VIX traded between 12.77 and 13.86 during the opening session. 

Brent Above $100 Keeps Oil Pressure on Indian Markets 

Brent crude was around $103–104 per barrel during the morning session, with Brent reported at approximately $103.70. Oil prices had risen around 1% after comments concerning Iran sanctions. 

The elevated crude price remained relevant for Indian markets because of its implications for the country’s import bill, the rupee, inflation concerns, monetary policy and corporate margins. The oil market therefore remained one of the factors shaping the domestic market backdrop while India VIX traded below its previous close. 

Lower Oil Prices Also Ease Rupee Pressure 

At the same time, another development in the oil market provided a contrasting signal. Oil prices had fallen around 2.5% from recent levels as Middle East exports showed signs of recovering. 

The decline in oil prices coincided with lower expectations of a US Federal Reserve rate hike. The rupee was expected to open around ₹95.94–95.99 per US dollar, compared with its previous two-month low near ₹96.15 per US dollar. The Reserve Bank of India was also reported to have been supporting the currency. 

US 10-Year Yield Near 5.24% Keeps Global Rates Elevated 

The US 10-year Treasury yield stood around 5.24%, close to its highest level since 2007. The yield had increased by almost 50 basis points during September, keeping global financial conditions tight. 

Higher US Treasury yields remained an important external market factor because they affected the relative attractiveness of US assets, emerging-market currencies and foreign portfolio flows. The elevated yield environment therefore formed part of the global backdrop as Indian equities entered the final session of September. 

Fed Rate-Hike Odds Fall From 70% To 44% 

Expectations of a US Federal Reserve rate hike at the next meeting declined during the latest session. The probability fell from nearly 70% to around 44%, following softer US economic data and comments from New York Federal Reserve President John Williams. 

The decline in rate-hike expectations provided a counterpoint to elevated Treasury yields. The change also coincided with the easing in oil prices and expectations of some support for the rupee. 

Asian Markets Rise As Nikkei Gains 1.4% 

Asian markets provided a relatively constructive backdrop during Wednesday’s opening session. Japan’s Nikkei 225 gained approximately 1.4%, while South Korea’s Kospi rose around 1% and the Kosdaq also gained around 1%. 

The gains came despite elevated global bond yields and continuing geopolitical uncertainty. The stronger Asian market performance contrasted with the weaker overnight performance of US equities and formed part of the mixed global market cues facing Indian equities. 

US Stocks Close Lower as Treasury Yields Rise 

US equities ended lower in the previous session, with the Dow Jones, S&P 500 and Nasdaq all declining. Rising Treasury yields were among the factors weighing on US markets. 

The weaker US close provided a negative overnight cue for Indian equities. However, the opening session in India also reflected stronger Asian markets, lower expectations of a Federal Reserve rate hike and domestic institutional buying. 

Dollar Index at 101.4 Adds Pressure to Rupee 

The US Dollar Index was around 101.4 during the morning session. A stronger dollar remained relevant to the Indian market because of its relationship with the rupee, dollar-denominated commodity costs and emerging-market financial conditions. 

The currency backdrop was also influenced by lower expectations of a Federal Reserve rate hike and reported Reserve Bank of India support for the rupee. These factors formed part of the broader global currency and interest-rate environment during the India VIX opening session. 

Heavy Futures Shorts Keep September Volatility Elevated 

Foreign investors significantly increased index-futures short positions during September. Their net index-futures shorts reached approximately 267,000 contracts, while Nifty futures open interest increased by nearly 30%. 

The October Nifty futures rollover stood at approximately 74%, while the Bank Nifty rollover was around 79%. These derivatives positions followed a month in which the Nifty declined approximately 6.7% and Bank Nifty fell around 5.7%. 

The positioning formed part of the market conditions entering the September 30 session, as India VIX remained above its 52-week low of 8.72. 

September Expiry Leaves VIX Elevated at 13.41 

Tuesday’s session coincided with the monthly futures and options expiry and the Nifty’s half-yearly reshuffle. The closing auction recorded the second-highest-ever volume, accompanied by substantial derivatives activity. 

The Nifty ended September 29 at 22,716.20, down 0.28%, after touching an intraday decline of 0.9%. India VIX reached 14.77 during the session before closing at 13.41. 

As Wednesday’s session began, the index therefore carried forward the previous day’s elevated volatility level while subsequently declining to 13.18, down 1.72%, by 10:03 IST. 

India VIX Technical Levels Show 13.80 Pivot 

India VIX’s technical levels for September 30 place the classic pivot point at 13.80, with resistance levels at 14.38, 15.36 and 15.94, while support levels are 12.82, 12.24 and 11.26. 

Under Fibonacci levels, the pivot is 13.80, with resistance at 14.39, 14.76 and 15.36, and support at 13.20, 12.83 and 12.24. The Camarilla framework places resistance at 13.55, 13.70 and 13.84, with support at 13.27, 13.12 and 12.98. The technical rating for India VIX is Neutral. 

India VIX September History Shows 4.55% Average Gain 

Historical seasonality data shows that India VIX has delivered positive returns in September in 9 out of 18 years. The maximum positive September change was 34.92% in 2018, while the average positive change was 19.04%. 

The maximum negative September change was 26.10% in 2009, with the average negative change at 9.93%. Across the available September history, the average change stands at 4.55%. 

India VIX stood at 13.18, down 1.72%, at 10:03 IST on September 30, after moving between 12.77 and 13.86. The opening session featured contrasting domestic institutional flows, elevated crude prices, US-Iran uncertainty, high Treasury yields, lower Fed rate-hike expectations and stronger Asian markets, keeping volatility conditions mixed. 

Source 

• https://www.nseindia.com/reports-indices-historical-vix