India VIX Falls 8.31% to 12.25 as Tensions Ease and Earnings Lift Markets

Mumbai, July 10: India’s volatility gauge, India VIX, extended its decline in Friday’s closing session, falling 1.11 points or 8.31% to 12.25 after a sharp spike earlier this week. The easing in volatility coincided with a recovery in domestic equities as concerns over geopolitical developments moderated and the June-quarter earnings season began on a positive note.  

Market participants also tracked movements in crude oil prices, global equity markets and foreign institutional investor activity, all of which contributed to a calmer trading environment after Wednesday’s sharp bout of volatility. 

India VIX Drops 8.31% After Wednesday’s Volatility Shock 

India VIX settled at 12.25, down 8.31% from its previous close of 13.36, after opening unchanged at 13.36. During the session, the index touched an intraday high of 13.36 and declined to a low of 12.12, indicating that volatility continued to ease throughout the day.  

The latest decline follows one of the sharpest single-session increases witnessed this year, when India VIX surged by around 26% on 8 July amid broad-based weakness across Indian equity markets.  

Although volatility has moderated over the past two sessions, the index remains comfortably above the levels seen earlier this month, reflecting that market uncertainty has reduced but has not disappeared completely. 

Sensex Rally Above 77,500 Coincides with Lower Volatility 

The decline in India VIX accompanied a broad recovery in domestic benchmark indices during Friday’s session. The Sensex climbed by more than 800 points to move above 77,500, while the Nifty 50 crossed the 24,200 mark after recovering from Wednesday’s sharp correction.  

The rebound also added nearly ₹5 lakh crore to the total market capitalisation of companies listed on the BSE, taking the combined market value to almost ₹481 lakh crore.  

The improvement followed the heavy sell-off on 8 July, when the Sensex had declined by 1,677 points (2.15%), the Nifty 50 had fallen 516.65 points (2.12%) to 23,882, and more than ₹8 lakh crore in market capitalisation had been erased during heightened uncertainty. 

Geopolitical Risks Ease as Immediate Concerns Moderate 

The sharp rise in India VIX earlier this week was largely linked to renewed geopolitical developments involving the United States and Iran, including military activity around the Strait of Hormuz, developments surrounding ceasefire arrangements and concerns over regional stability. Those developments had fuelled demand for protective positions in the derivatives market, pushing volatility sharply higher.  

By Friday’s closing session, however, analysts noted that markets had largely absorbed the immediate developments, resulting in a significant easing of volatility. While geopolitical developments continue to remain under observation, Friday’s trading reflected a reduction in immediate market uncertainty compared with conditions prevailing earlier in the week. 

Strong TCS Results Shift Focus Towards Corporate Earnings 

Attention also shifted towards the start of the Q1 FY27 earnings season after Tata Consultancy Services (TCS) reported quarterly revenue that exceeded market expectations, supported by stronger demand from banking clients and the benefit of a weaker rupee. The company also recorded its highest hiring in four years, while its shares rose by more than 3% during early trade.  

The positive earnings announcement lifted the broader information technology segment, with the Nifty IT index advancing by more than 2%. As volatility eased, market commentary increasingly centred on corporate earnings rather than the risk-driven factors that had dominated trading earlier in the week. 

Global Markets, Oil and Rupee Add Stability 

Broader global market conditions also supported Friday’s recovery. Asian equity markets traded firmly higher, with South Korea’s Kospi gaining more than 4%, while Hong Kong’s Hang Seng advanced by around 2%. Overnight, US markets also ended higher, with the Nasdaq Composite rising 1.30%.  

At the same time, Brent crude traded near US$75-77 per barrel, easing concerns over India’s import bill after recent volatility in energy markets. The Indian rupee also strengthened by around 10-15 paise to approximately 95.29-95.32 against the US dollar. Together, these developments contributed to a more stable trading environment and reduced demand for volatility protection. 

Technical Levels Show Neutral Trend Despite YTD Gain 

Despite Friday’s decline, India VIX continues to show a Neutral technical trend. The volatility index has generated 29.22% year-to-date returns and remains within its 52-week range of 8.72 to 28.90. Based on the previous trading session, the Classic Pivot levels place resistance at 14.34, 15.32 and 15.96, while support is identified at 12.72, 12.08 and 11.10. Friday’s intraday low of 12.12 brought the index close to one of its key support levels before it closed at 12.25, highlighting that volatility has eased substantially from this week’s peak while remaining above the lows recorded earlier this month. 

July Pattern Continues with Seasonal Weakness 

Historical data continues to indicate that July has generally been a weaker month for India VIX. Seasonality analysis shows that the volatility index has delivered negative returns in 15 of the past 18 years during July. Historically, the month has recorded a maximum positive change of 7.39% in 2011, an average positive gain of 4.47%, a maximum decline of 24.22% in 2022, an average negative change of 11.25%, and an overall average monthly movement of -8.63%. Friday’s decline further aligned with the historical tendency for volatility to moderate during July following periods of elevated market uncertainty. 

India VIX-specific developments remained limited on 10 July, with market coverage primarily focusing on the cooling of volatility after Wednesday’s spike. Across trading updates and market previews, analysts highlighted that attention has now shifted towards quarterly corporate earnings, crude oil movements, geopolitical developments and foreign institutional investor activity as the principal factors influencing near-term market conditions. Friday’s session reflected this transition, with volatility easing while broader equity benchmarks recovered from the sharp declines recorded earlier in the week. 

India VIX closed the week at 12.25, down 8.31%, extending its decline after Wednesday’s sharp volatility spike. The session reflected easing geopolitical concerns, a stronger start to the corporate earnings season, supportive global market cues, lower crude oil prices and a firmer rupee, while technical indicators continued to classify the broader trend as Neutral. 

Source 

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