India VIX Falls Over 3% as Crude Eases Ahead of US Iran Sanctions

Mumbai, Aug 24: India VIX eased sharply in the opening session on Monday as lower crude oil prices and a positive start in Indian equities reduced immediate volatility, even as markets remained cautious ahead of the US announcement on additional sanctions against Iran.  

India VIX started around 11.20/11.195, close to Friday’s 11.20 close, before falling to about 10.83, a decline of more than 3%. Around 9:29 a.m. IST, another market reading showed the index at approximately 11.13, down around 0.65%, highlighting movement during the first few minutes. By 9:51 a.m. IST, the early-session direction remained one of easing volatility. 

India VIX Drops from 11.20 as Equities Open Higher 

The early movement in India VIX came as Indian equities opened higher. At 9:15 a.m. IST, the Nifty 50 stood at 24,285.05, up 0.14%, while the Sensex was at 77,629.56, up 0.11%. By around 9:20–9:25 a.m., the Nifty had moved around 24,300, while the Sensex was more than 200 points higher. 

The positive domestic opening provided an immediate counterweight to the geopolitical uncertainty surrounding Iran. The combination of a firmer Nifty and broader market participation reduced the immediate pressure reflected through India VIX, taking the index from around 11.20 towards 10.83 during early trade. 

The move was therefore not a broad disappearance of geopolitical risk. Instead, the opening reaction was led by the immediate market effect of lower crude prices and stronger Indian equities, while the Iran-related event remained ahead. 

Crude Falls Over $1 as Iran Sanctions Loom 

The most immediate factor supporting the fall in India VIX was the decline in crude oil prices. Oil prices fell by more than $1 a barrel in early Asian trade as market participants took profits ahead of the expected US sanctions announcement against Iran. Brent crude was around $93.45 a barrel, down roughly 1%, while West Texas Intermediate (WTI) traded near $86.16, also lower by about 1%.  

The decline in crude eased immediate concerns over India’s imported energy costs, supporting the positive opening in domestic equities and reducing near-term volatility. For India VIX, falling crude was the strongest immediate volatility-lowering factor, although the move remained conditional on developments surrounding the sanctions. 

US Iran Sanctions Keep a Major Volatility Risk Ahead 

The largest global event affecting today’s market is the expected US announcement of additional sanctions against Iran. US Treasury Secretary Scott Bessent is scheduled to hold a press conference at 11:30 p.m. IST regarding new measures against Tehran.  

The US has threatened what has been described as the “toughest sanctions in history” on Iran. Markets are assessing whether the measures could target countries purchasing Iranian oil, disrupt Iranian crude exports, or trigger retaliation from Tehran.  

Investors are also monitoring potential risks to shipping through the Strait of Hormuz, a critical oil transit route. However, as the sanctions had not been announced during the opening session, India VIX was pricing the possibility of escalation rather than an actual event. This kept geopolitical uncertainty elevated but allowed VIX to decline initially. 

Strait of Hormuz Risk Limits the Fall in VIX 

The decline in crude oil prices did not eliminate the underlying energy risk. Markets remain focused on whether stronger US economic pressure could affect Iranian oil exports or trigger further threats involving the Strait of Hormuz. The implications for India VIX remain closely linked to crude prices. If there is no major disruption, oil prices could remain contained.  

However, intensified threats to shipping could push crude prices higher, increasing concerns over India’s imported inflation and external balances. Any actual disruption to oil supplies could trigger a sharper volatility event.  

Consequently, the Strait of Hormuz remains an important upside risk for India VIX, even though it did not push the index higher during the opening session. 

GIFT Nifty at 24,350 Sets a Positive Opening Tone 

The domestic market had received a positive signal before the opening through GIFT Nifty. It was reported around 24,350, up 64 points or 0.26%, while another pre-open reading showed it around 24,378. 

The positive GIFT Nifty indication helped establish expectations for a firmer Indian opening. That was subsequently reflected in the Nifty and Sensex gains at 9:15 a.m. 

The positive opening also reduced immediate pressure on downside hedging and helped lower implied volatility. As a result, GIFT Nifty was one of the clearest domestic factors supporting the early decline in India VIX. 

13 of 16 Sectors Advance as Market Breadth Improves 

The opening strength was broad rather than limited to a small number of index constituents. At 9:15 a.m., 13 of 16 major sectors advanced, while both mid-cap and small-cap indices were up around 0.2%. 

Subsequent market updates showed gains across IT, metals, financials and autos, while pharma was weaker. Several large-cap stocks, including Infosys, HDFC Bank, Tata Steel, IndiGo, Maruti Suzuki and M&M, were reported to be gaining close to 1% shortly after the opening. 

The broad participation reinforced the positive domestic opening and contributed to the lower immediate volatility reading. 

Mixed Global Cues Keep Volatility Risks in Focus 

Asian markets delivered a mixed backdrop as investors awaited details of the US sanctions on Iran. The Nikkei 225 fell 0.08%, Kospi declined 0.97%, while Kosdaq gained 2.25% and Topix rose 0.16%. US equities provided support after Friday’s gains, with the Dow Jones up 0.98%, S&P 500 0.43% and Nasdaq 0.44%, although all three posted weekly losses.  

Meanwhile, markets are awaiting Nvidia’s earnings and Federal Reserve Chair Kevin Warsh’s speech later this week. Elevated global bond yields and inflation concerns added caution.  

Overall, the mixed global cues limited the positive impact on India VIX, while uncertainty around Iran remained an additional source of volatility during Monday’s early session. 

Rupee at ₹95.65–₹95.70 Provides a Stable Currency Backdrop 

The rupee was expected to open around ₹95.65–₹95.70 per US dollar, compared with Friday’s close of ₹95.6950. 

The relatively stable opening indication provided another supportive factor for Indian markets. The Reserve Bank of India (RBI) has also accumulated nearly $73 billion under measures introduced in June to strengthen the balance of payments, helping foreign exchange reserves move close to a record. 

This stable currency backdrop reduced one immediate transmission channel for the Iran and crude-related risks and therefore supported the lower-volatility opening. 

₹543 Crore FPI Selling Offsets ₹2,123 Crore DII Buying 

The latest available domestic institutional-flow data showed foreign portfolio investors (FPIs)/foreign institutional investors (FIIs) as net sellers of ₹543 crore on Friday, while domestic institutional investors (DIIs) were net buyers of ₹2,123 crore. 

These figures are not fresh intraday flows for 24 August but represent the latest available positioning data carried into Monday’s session. They therefore provide background context rather than a new opening catalyst. 

Gold Rises as Geopolitical Caution Remains 

Gold also extended its gains during today’s global session, reaching its highest level in more than three months as markets looked towards US inflation data and Kevin Warsh’s speech later this week. 

The simultaneous combination of stronger Indian equities, lower India VIX and higher gold indicates that the opening session contained both stabilising and defensive market signals.  

The immediate equity response was supported by lower crude and a positive domestic opening, while geopolitical uncertainty remained visible through demand for safe-haven assets. 

India VIX opened lower as crude prices fell and domestic equities gained. However, pending US sanctions on Iran, Strait of Hormuz risks and mixed global cues kept uncertainty elevated. VIX declined from around 11.20 to 10.83, while Nifty and Sensex opened higher. 

Source 

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