India VIX Falls 1.31% After Early 12.11 Spike as Oil and Geopolitical Risks Ease

Mumbai, Sept 2: India VIX stood at 11.34, down 0.15 points or 1.31%, as of 15:41 IST on Wednesday, after moving sharply between an intraday low of 10.54 and a high of 12.11. The volatility index opened at 11.49, its previous close, before an early rise reflected renewed geopolitical and crude-oil concerns. The index later eased as domestic equities recovered from their lows, leaving the session’s volatility range significantly wider than the closing move indicated. 

India VIX at 11.34 After 12.11 Intraday High 

India VIX began the session at 11.49 and initially moved higher as global markets reacted to renewed US-Iran military escalation, a sharp rise in crude oil prices and weakness across Asian equities. The index reached an intraday high of 12.11 before retreating during the session. It also touched a low of 10.54, highlighting the wide movement in expected market volatility during the day. 

The benchmark Nifty opened around 23,858 after closing at 24,055.80 on 1 September and moved towards 23,786, while the Sensex fell as much as 809 points in the morning. The decline below the psychologically important 24,000 level coincided with the initial rise in India VIX. As the benchmarks recovered from their lows, the volatility index also moved away from its intraday peak. 

US-Iran Escalation Pushes Crude Towards $96 

Renewed military escalation between the United States and Iran was the key fresh global development during the session. US strikes on Iranian military targets and retaliatory actions by Iran heightened concerns over a wider conflict and possible disruption to energy supplies in the Middle East. 

The development pushed Brent crude towards $95–96 per barrel, with reports placing it around $95.4 during the session. The rise in crude added a direct domestic concern for India because higher oil prices affect the country’s import bill, inflation, corporate costs, transportation expenses and the rupee. 

The combination of geopolitical uncertainty and higher energy prices contributed to the risk-off opening in Indian equities and the initial rise in India VIX. 

US 10-Year Yield Near 4.81% Adds Market Pressure 

The global bond market also remained under pressure, with the US 10-year Treasury yield around 4.81%, close to a three-year high. Japanese government bond yields remained elevated, with the 10-year Japanese yield above 3%. 

The rise in bond yields accompanied concerns over inflation and interest rates after the increase in crude prices. The combination of higher oil prices and elevated global yields added to pressure on equities and reinforced the cautious tone across international markets. 

For Indian markets, the external pressure came alongside the possibility of higher imported inflation and tighter global financial conditions, contributing to the early movement in India VIX. 

Asian Markets Slide as Global Risk Aversion Spreads 

Asian equities extended the global sell-off on 2 September following weakness on Wall Street and the rise in bond yields and crude prices. The KOSPI fell around 4%, while the Nikkei 225 declined around 2.9%. Other markets across Japan, South Korea, Hong Kong, Shanghai and Taiwan also recorded declines. 

The previous US session had ended lower, with the Dow Jones down about 0.8%, the S&P 500 down about 0.7% and the Nasdaq down about 1%. Technology weakness, higher oil prices and rising Treasury yields created a negative external backdrop for Indian equities. 

Indian information technology stocks, including Infosys, Tata Consultancy Services, Wipro and HCLTech, were among the pressured names during the session. 

Rupee Holds Near ₹94.89 as RBI Supports Currency 

The Indian rupee opened around ₹94.89 against the US dollar, compared with approximately ₹94.95 previously. Despite pressure from crude prices and higher US yields, the currency remained relatively stable during the session amid Reserve Bank of India (RBI) intervention, including dollar sales and liquidity support. 

The relatively contained movement in the rupee provided a counterweight to the external pressures affecting Indian markets. The currency therefore remained a risk channel during the session but did not become an additional destabilising shock. 

August PMI Weakens as Manufacturing Growth Slows 

Domestic economic data added another layer to the market’s cautious backdrop. India’s August manufacturing Purchasing Managers’ Index (PMI) showed manufacturing growth slowing to its lowest level in five years, accompanied by weaker demand, output and new orders. 

Employment also recorded its first contraction in more than two years. The data emerged alongside the geopolitical and crude-oil concerns, adding a domestic growth-related concern to the broader market environment. 

However, India’s 7.8% Q1 FY27 gross domestic product (GDP) growth remained an important positive domestic backdrop. The GDP figure was not a new development during the 2 September session, but it provided a fundamental counterweight to the external pressures affecting the market. 

Nifty Below 24,000 Lifts Volatility Before Recovery 

The movement in the Nifty itself contributed to the early rise in India VIX. After closing at 24,055.80 on 1 September, the index opened around 23,858 and declined towards 23,786, moving below the 24,000 level. 

As the Nifty approached 23,800, the Sensex had fallen as much as 809 points. The decline was broad-based, with all 16 major sectors reported lower during the morning session, while mid-cap and small-cap stocks also declined. 

The subsequent recovery reduced the intensity of the volatility move. The Sensex recovered roughly 350 points from its day’s low, while the Nifty moved back towards 23,900. India VIX correspondingly eased from its intraday high of 12.11. 

Coal India And Sun Pharma Limit Market Weakness 

Although the broader market remained under pressure, some stock-specific developments provided support. Coal India gained after reporting a 5.5% increase in August coal supplies and announcing plans for an initial public offering of its Mahanadi Coalfields subsidiary. Sun Pharma also gained following a favourable US pricing agreement. 

At the sector level, auto stocks were particularly weak, while information technology, realty and consumer-facing stocks also faced pressure. Some energy-related stocks benefited from higher crude prices, creating pockets of strength within an otherwise weak market. 

September VIX History Shows 9 Positive Years 

Historical seasonality data shows that India VIX has recorded positive returns in 9 of 18 years during September. The maximum positive change for the month was 34.92% in 2018, while the average positive change was 17.29%. The maximum negative change was -26.10% in 2009, with an average negative change of -9.93%. The historical average change for September stands at 3.68%. 

The technical rating for India VIX remained NEUTRAL. The Classic pivot levels were R1 12.66, R2 13.83, R3 15.54, PP 10.95, S1 9.78, S2 8.07 and S3 6.90. Fibonacci levels stood at R1 12.05, R2 12.73, R3 13.83, PP 10.95, S1 9.85, S2 9.17 and S3 8.07, while Camarilla levels were R1 11.75, R2 12.02, R3 12.28, PP 10.95, S1 11.23, S2 10.96 and S3 10.70. 

India VIX closed at 11.34, down 1.31%, after touching 12.11 during the session. The day’s movement reflected the combined effect of US-Iran escalation, crude near $96, elevated global bond yields, weaker Asian equities and domestic data, while the later recovery in Indian benchmarks reduced the intraday volatility spike. 

Source 

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