India VIX Rises 3.72% as Crude Nears $94 and Middle East Risks Pressure Indian Markets

Mumbai, Aug 21: India VIX rose 0.40 points, or 3.72%, to 11.12 at 10:06 IST on Friday, as higher crude prices, continuing Middle East uncertainty, pressure on the rupee and global bond-market stress offset an initially positive opening in Indian equities. The volatility gauge opened at 10.75, against the previous close of 10.76, and moved between 9.57 and 11.35 during the session so far.

India VIX Gains 3.72% as Oil and Geopolitical Risks Return

The early rise in India VIX comes after volatility fell sharply on Thursday, when the index ended at around 10.58, down 6.57%, while the Nifty 50 gained 0.64%. Friday’s opening therefore began from an exceptionally low volatility base, making the current move more visible in percentage terms.

At 9:15 a.m. IST, the Nifty 50 opened at around 24,284.05, up 0.22%, while the Sensex started at approximately 77,701.07, up 0.21%. The positive opening initially provided a relatively stable backdrop for volatility. However, the indices subsequently became choppy and moved into negative territory as concerns surrounding the Middle East and crude oil re-emerged.

Brent Near $94 Limits Gains and Supports VIX

The strongest fresh global factor in the opening session has been the rise in crude oil prices. Brent was trading just below $94 a barrel, close to one-month highs, after gaining more than 12% over the preceding two weeks.

The increase has been linked to concerns over supply stability amid the continuing US-Israeli conflict with Iran. For Indian markets, higher crude prices remain important because they can increase the import burden, place pressure on the rupee, add to inflation concerns and affect corporate margins.

The combination of higher oil prices and geopolitical uncertainty is therefore providing an upside force for India VIX, even though Indian equities initially opened higher. The oil move has also limited the strength of the domestic market’s early gains.

Rupee at ₹95.69 Adds a Second Volatility Channel

The rupee was trading around ₹95.6875 per US dollar, with traders expecting a relatively narrow range around ₹95.74–₹95.78. Higher crude prices, persistent dollar demand from Indian importers and corporate currency hedging have added pressure to the currency.

This creates an additional source of uncertainty for the domestic market. Higher oil prices can increase demand for dollars, while currency hedging activity can add to near-term fluctuations.

However, the pressure has been partly cushioned by apparent dollar sales from state-run banks, likely on behalf of the Reserve Bank of India (RBI), along with a broadly weaker US dollar. The RBI’s intervention is therefore providing a counterweight to the oil-driven pressure on the rupee.

Global Bond Stress Keeps the Opening Uneven

Global bond-market stress is another factor limiting the strength of India’s positive opening. Higher crude prices and stress in global bond markets were identified as key reasons why the initial gains in Indian equities remained modest.

The broader backdrop is therefore mixed. Asian equities opened higher, which avoided a major overnight regional risk-off move, but several Asian markets remained on course for weekly losses. The weaker US dollar is providing some support to emerging-market currencies, including the rupee, while higher oil prices and global bond-market pressure are working in the opposite direction.

This combination has kept the early Indian session cautious and uneven rather than producing a clear one-directional move.

India VIX Starts from 10.58 After Thursday’s Sharp Fall

Thursday’s decline in India VIX provides important context for Friday’s movement. The volatility index had fallen to around 10.58, while the Nifty ended at 24,231.85, gaining 0.64% and breaking a seven-session losing streak.

The Sensex also gained roughly 628 points, while banking and information technology stocks contributed to the recovery. The sharp fall in volatility meant that the options market entered Friday with a comparatively low implied-volatility base.

The current rise to 11.12 therefore represents a rebound from Thursday’s subdued level rather than a move towards the 52-week high of 28.90. India VIX remains well above its 52-week low of 8.72, while its current intraday range stands at 9.57–11.35.

Nifty’s 24,300–24,400 Zone Could Keep Volatility Choppy

The domestic market’s ability to sustain Thursday’s recovery is another important part of Friday’s opening picture. Analysts had highlighted the 24,300–24,400 area as an important region for the Nifty, with immediate support around 24,150, followed by 24,000.

The Nifty’s initial move to 24,284.05 therefore placed it just below that highlighted zone. The subsequent choppy movement has kept the relationship between equity prices and volatility unsettled during the early session.

India VIX’s technical rating remains Neutral. The Classic pivot levels for the day are 11.61, 12.46 and 13.60 for resistance, with the pivot point at 10.47 and support levels at 9.62, 8.48 and 7.63. Fibonacci levels stand at 11.23, 11.70 and 12.46 on the upside, with 10.47 as the pivot and 9.71, 9.24 and 8.48 as supports. Camarilla levels are 10.94, 11.12 and 11.31, with 10.47 as the pivot and 10.58, 10.40 and 10.21 as the lower levels.

FII Selling and DII Buying Create A Mixed Domestic Backdrop

The latest institutional-flow data available around the opening also presents opposing forces. Foreign institutional investors (FIIs) recorded net selling of approximately ₹583 crore, while domestic institutional investors (DIIs) were net buyers of around ₹3,538 crore.

The combination creates a mixed domestic backdrop for the volatility index. Foreign selling can add pressure to the benchmark indices, while domestic institutional buying provides a counterweight. However, these flows are supporting factors for the opening session rather than the primary fresh catalyst behind today’s movement.

August Has Delivered Positive VIX Returns in 12 of 18 Years

Historical seasonality also provides context for the current month. India VIX has delivered positive returns in 12 of the past 18 Augusts. For August, the maximum positive monthly change recorded is 68.84% in 2015, while the average positive change is 18.10%. The maximum negative change is -11.26% in 2016, with an average negative change of -5.92%. The average August change stands at 10.10%.

These historical figures describe past monthly movements and do not alter the immediate opening-session factors affecting India VIX today.

India VIX’s 3.72% rise to 11.12 at 10:06 IST reflects the interaction of higher crude near $94, Middle East uncertainty, rupee pressure and global bond-market stress, while the positive but choppy equity opening and RBI-related currency support have limited the move from Thursday’s low-volatility base.

Source

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