India VIX Falls 5.96% As Hormuz Reopening Hopes Push Crude Lower 

Mumbai, Aug 26: India VIX fell 0.66 points, or 5.96%, to 10.45 to close on Wednesday, compared with the previous close of 11.08. The volatility index opened at 11.07 and touched an intraday low of 10.13, while its day high stood at 11.07. The decline came as easing concerns over the Strait of Hormuz, lower crude prices and firmer Indian equities reduced immediate volatility pressures during the session. 

India VIX Falls 5.96% As Oil Risks Ease 

The main development influencing the session was renewed diplomatic activity between Iran and Oman concerning the Strait of Hormuz. Reports of discussions over the management and possible reopening of the strategically important waterway increased expectations of a temporary navigational corridor and eventual restoration of shipping through the strait. 

The development was significant for oil markets because the Strait of Hormuz remains critical to global crude flows. Brent crude fell to around $86.3-$86.45 a barrel, with prices declining by more than 2% as reopening hopes increased. The softer crude backdrop reduced concerns surrounding India’s oil import costs and related external pressures. 

Brent Crude Falls Over 2% As Hormuz Hopes Rise 

Crude oil remained a key market variable throughout the session. Brent fell more than 2%, while another market feed showed WTI at around $79.89, down 3%, and Brent at approximately $84.84, down 2.78% at the time of its update. 

The decline in crude prices eased concerns across several areas, including India’s import bill, inflationary pressure, the rupee, corporate input costs and the current account. Lower oil prices also reduced concerns about additional monetary-policy pressure, providing a more supportive external backdrop for Indian equities. 

The softer oil environment therefore coincided with the decline in India VIX, which measures expected volatility in the Nifty through option prices. 

Nifty Gains 0.17% As Crude Supports Indian Equities 

Indian equities also remained firm as the geopolitical backdrop improved. The Nifty 50 rose 0.17% to 24,374.50, while the Sensex gained 0.41% to 77,979.32. Twelve of the 16 major sectors advanced, while small- and mid-cap indices also gained. Public sector banks led the sectoral rise. 

The broader market performance provided a calmer setting for volatility during the session. With the benchmark indices holding higher levels rather than facing a fresh broad-based decline, immediate downside-volatility concerns remained contained. 

The relationship was also reflected in the intraday movement of India VIX. After opening close to 11.08, the index declined towards 10.13 before recovering partially during the afternoon. 

Global Stocks Rise as Oil and Yields Decline 

Global market conditions also supported the calmer Indian session. Global stocks edged higher as falling oil prices and hopes of reopening the Strait of Hormuz improved the external market backdrop. 

Asian markets benefited from lower crude prices, softer bond yields and optimism surrounding the technology sector ahead of Nvidia’s results. Asian technology stocks gained more than 1%, while global equities remained supported by the decline in oil prices. 

Global bond yields also moved lower. The decline in oil prices helped pull yields down, with German two-year yields falling by more than 2 basis points. Softer global yields provided another supportive factor for risk assets during the session. 

RBI Bulletin Flags Crude and Geopolitical Risks 

The Reserve Bank of India’s August Bulletin provided a contrasting domestic backdrop by highlighting continuing risks from crude-oil prices, geopolitical tensions, global trade uncertainty and monsoon-related developments. 

The bulletin also noted that recovery in the southwest monsoon had helped kharif sowing move closer to normal levels, partly reducing agricultural risks. These observations kept attention on the broader inflation and external-risk environment, although they did not reverse the decline in India VIX during Wednesday’s session. 

The immediate market focus remained on developments surrounding Hormuz and the resulting movement in crude prices. 

Rupee Gains as Lower Crude Eases External Pressure 

The currency market also reflected the softer oil environment. A live market feed showed USD/INR at around ₹95.23, down approximately 0.19% at the time of its update. 

Lower crude prices reduced import-cost pressure and provided a more supportive backdrop for the rupee. This formed another link between the oil-market development and the broader decline in volatility during the Indian trading session. 

The currency movement remained a secondary factor compared with the direct impact of crude prices and Hormuz-related developments. 

Nvidia Results Add Global Event Risk to Calm Session 

Nvidia’s results, due later on Wednesday, remained an important global event being watched by markets. The results were being assessed for signals on artificial-intelligence valuations, semiconductor demand, technology-sector earnings and the sustainability of global AI investment. 

Asian technology stocks gained amid optimism surrounding the results, meaning the event did not create a significant volatility shock during India’s trading hours. However, it remained a major external event risk during the session. 

India VIX Trades Near 10.5 After August Expiry 

The market also entered Wednesday after the major August Nifty derivatives expiry on 25 August. On Tuesday, the Nifty had gained 0.48% to 24,334.55, while India VIX had already declined amid a sharp fall in crude prices. 

With the immediate expiry-related positioning pressure behind the market, the derivatives environment was comparatively calmer on Wednesday. This was relevant because India VIX is derived from Nifty option prices, making changes in option pricing and hedging requirements directly relevant to the index. 

India VIX Low of 10.13 Shows Intraday Volatility Relief 

The intraday pattern highlighted the extent of the decline. India VIX opened at 11.07, close to the previous close of 11.08, before falling to 10.13. Afternoon readings showed the index around 10.58-10.86, depending on the timestamp and data feed. 

At 15:39 IST, the index was reported at 10.45, down 5.96%. The day’s range was therefore 10.13-11.07, while the 52-week range remained 8.72-28.90. Its technical trend was rated NEUTRAL. 

August Seasonality Remains Positive At 9.83% 

Historical seasonality also remained relevant. India VIX has delivered positive returns in 12 of 18 years during August. The maximum positive August change was 68.84% in 2015, while the average positive change was 18.10%. The maximum negative change was -11.26% in 2016, with an average negative change of -6.72%. The average August change stands at 9.83%. 

India VIX declined from 11.08 to 10.45 as Hormuz reopening hopes, lower crude prices and firmer Indian equities reduced volatility during the session. The index touched 10.13 intraday. Broader risks from crude prices, geopolitics, global trade and upcoming global events remained present as the session concluded. 

Source 

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