India VIX Rises 12.09% as US-Iran Deadlock, Crude and Nifty Sell-Off Lift Volatility

Mumbai, Sept 28: India VIX rose 1.47 points, or 12.09%, to 13.63 on 28 September, as renewed US-Iran tensions, higher crude oil prices, pressure on the rupee and a broad decline in Indian equities lifted volatility during the session. The index opened at 12.16, touched a high of 14.14 and remained above Friday’s close of 12.16 through the session. 

India VIX Climbs 12.09% as Market Volatility Rises 

The India VIX, a measure of expected near-term volatility in the Nifty, moved sharply higher after beginning the session at 12.16. It recorded an intraday low of 12.16 and reached 14.14, marking an increase of about 16.3% from the previous close at its morning peak. 

By around 10:15 am, the index was at 13.89, up 14.23%, before easing to around 13.65 by 1:30 pm, still 12.25% higher. The final session reading stood at 13.63, up 1.47 points. 

The move reversed the moderation seen on 25 September, when India VIX closed at 12.16, down 4.18%. 

US-Iran Deadlock Pushes Brent Above $106 

The main international development affecting the session was the lack of progress in US-Iran diplomacy and uncertainty surrounding the Strait of Hormuz. US President Donald Trump rejected an Iranian proposal linked to reopening the strategic shipping route and ending the fighting, while Iran maintained that diplomacy remained the route to resolving the conflict. 

The diplomatic deadlock raised concerns about the continuation of disruption around the Strait of Hormuz, contributing to a rise in crude prices. Brent crude futures climbed about 2.3% to $106.7 a barrel in early trading. 

For India, higher crude prices are significant because the country is a major crude importer. The increase raised concerns around the import bill, inflation and corporate margins, adding to pressure on domestic equities. 

Crude Above $105 Raises Pressure on Indian Markets 

Brent crude moved above $105-$106 a barrel during the session after the renewed geopolitical uncertainty. The rise in oil prices added to concerns surrounding India’s external costs and inflationary conditions. 

Higher crude prices can also affect the rupee because increased import payments can raise demand for foreign currency. During Monday’s session, the rupee opened near ₹95.88 per US dollar, around seven paise weaker than the previous session, and later hovered close to the ₹96 level. 

The Reserve Bank of India was reported to have intervened to limit further rupee weakness. The currency pressure therefore formed another part of the market backdrop alongside the oil-price increase and geopolitical uncertainty. 

Nifty Breaks 23,000 as Broad Selling Lifts VIX 

The domestic equity decline reinforced the rise in India VIX. The Nifty 50 had closed at 23,140.50 on Friday and opened at 23,064.90 on Monday before falling below 23,000. 

By around 11:58 am, the Nifty was reported at 22,819.40, down about 1.4%. The decline extended the market’s existing weak run and occurred alongside pressure across several segments of the equity market. 

The breadth of the decline was also visible in individual stocks. Seven Nifty 50 stocks touched their 52-week lows during the session: Reliance Industries, Jio Financial Services, Maruti Suzuki India, Tata Consumer Products, Tata Motors Passenger Vehicle, Hindustan Unilever and Wipro. Another 28 Nifty 500 stocks also reached 52-week lows. 

Bank Nifty Falls Below 55,000 As Banks Weigh 

Banking stocks added to the pressure on the broader benchmark. Bank Nifty fell below 55,000, touching an intraday low of 54,691.55, more than 800 points lower at that stage. 

Yes Bank, Union Bank, IDFC First Bank, Canara Bank, Punjab National Bank and State Bank of India were among the significant laggards during the session. 

The weakness across financial stocks added to the decline in the broader market, while the simultaneous fall across several sectors contributed to the wider deterioration in market conditions during the day. 

US 10-Year Yield Above 5.2% Adds Global Pressure 

Elevated US Treasury yields formed another part of the international market backdrop. The US 10-year Treasury yield remained above 5.2% during early Indian trading, with the level reported at its highest in roughly two decades. 

The combination of higher US Treasury yields, rising crude prices and renewed geopolitical uncertainty created a broader global risk backdrop for Indian equities. These developments occurred alongside the domestic decline in the Nifty and banking stocks, coinciding with the sharp rise in India VIX. 

FPI Outflows Add to September Market Weakness 

Foreign portfolio investor flows remained an existing source of pressure entering the session. On 25 September, foreign institutional investors sold ₹3,693.93 crore in the cash market, while domestic institutional investors purchased ₹2,838.17 crore. 

Foreign equity outflows for September had reached about ₹18,531 crore by the weekend. These figures represent the flow backdrop before Monday’s session; final foreign and domestic institutional flow figures for 28 September were not yet confirmed in the information available. 

Mixed Asian Markets Contrast with India’s Decline 

Asian markets delivered a mixed signal during Monday’s session rather than moving uniformly lower. Japan’s Nikkei gained 0.75%, while the Topix rose 0.58%. South Korea’s Kospi declined 1.07%, whereas the Kosdaq advanced 1.62%. Hong Kong futures indicated a weaker opening. 

The Indian market’s move was therefore accompanied by mixed regional trading conditions, while the impact of higher crude prices remained particularly relevant for India because of its dependence on imported oil. 

September History Shows 4.70% Average VIX Change 

Historical seasonality data showed that India VIX has recorded positive returns in 9 of 18 years during September. The month has recorded a maximum positive change of 34.92% in 2018 and an average positive change of 19.34%. 

The maximum negative September change was -26.10% in 2009, while the average negative change was -9.93%. The overall average September change stands at 4.70%. 

Analysts also noted that India VIX had risen almost 36% over the preceding three trading sessions and had moved above a downward-sloping trendline towards its 200-day exponential moving average. The cited technical levels included 11.0-11.3 as support and 15.3-15.5 as resistance, with the Nifty implied-volatility percentile around 64%. 

India VIX Ends at 13.63 After 14.14 Intraday High 

The session’s movement can be traced from Friday’s 12.16 close to Monday’s 12.16 opening, followed by a rise to the 14.14 intraday high as crude prices increased and Indian equities weakened. 

The index subsequently moderated from its morning peak, reaching around 13.65 at 1:30 pm, before the reported closing reading of 13.63, representing a 12.09% increase. Its 52-week range remained 8.72-28.90, while the year-to-date return stood at 43.78%. 

The session therefore combined geopolitical uncertainty, higher crude prices, currency pressure, elevated US Treasury yields and a broad domestic equity decline, with each development forming part of the market conditions accompanying the day’s higher India VIX reading. 

India VIX closed at 13.63, up 12.09%, after touching 14.14 intraday. The session was marked by US-Iran diplomatic uncertainty, Brent above $105-$106, rupee pressure near ₹96, elevated US Treasury yields and a Nifty decline below 23,000, alongside weakness in banking stocks. 

Source 

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