India VIX Rises 3.74% as Brent Nears $100 Amid Middle-East Tensions

Mumbai, Sept 9: India VIX rose 0.42 points, or 3.74%, to 11.77 as of 10:19 IST on 9 September, after opening at 11.23, the same as its previous close. The volatility gauge touched an intraday high of 11.80 and a low of 10.54, while the 52-week range stood at 8.72–28.90. The early-session move came as Indian equities opened lower, crude oil approached $100 a barrel, the rupee remained near ₹94.85 per US dollar, and Middle-East tensions intensified. 

India VIX Rises 3.18% as Nifty Slips Below 23,500 

Around 9:56 IST, India VIX was near 11.59, up 3.18%, with an intraday high of about 11.70. At the same time, the Nifty 50 was around 23,493, down 0.60%, while the Sensex stood near 75,130, down 0.59%. The opening session therefore saw volatility rise alongside a decline in the benchmark indices, although the move remained contained compared with sharper volatility episodes. 

The Nifty had opened at 23,487.85, down 147.25 points, while the Sensex fell 584.21 points to 74,993.37. The Nifty’s move below the psychologically important 23,500 level added to the weak opening backdrop for Indian equities. 

Brent Nears $100 as Oil Rise Raises India’s Risk 

The strongest immediate trigger during the morning session was the renewed rise in crude oil. Brent crude moved to approximately $99.5–$99.7 per barrel, approaching the $100 threshold, while WTI crude moved above $94. Oil was rising for a fourth consecutive session, bringing renewed attention to the impact of higher energy costs on India. 

The rise in crude was important because India is a major crude importer. Higher oil prices can widen the country’s import bill and add to inflation concerns, while also increasing pressure on the rupee. The combination of elevated crude and currency pressure formed a key part of the backdrop for the higher volatility reading during the opening session. 

Middle-East Escalation Pushes Oil and Volatility Higher 

The increase in crude prices came as the conflict involving the US and Iran intensified overnight and carried into the Asian trading session. Iran launched attacks against US military assets in the Gulf, while Iranian-backed Houthis launched strikes against several Saudi cities. US forces struck Iranian oil tankers, and Iran also struck a US base in Jordan. 

The developments heightened concerns over the potential spread of the conflict across the Middle East and possible disruption to energy supplies. With Brent moving towards $100, the geopolitical developments became closely linked to the oil-price pressure confronting Indian markets at the start of trading. 

Rupee Near ₹94.85 Adds to Oil-Linked Pressure 

The Indian rupee was another factor affecting the market backdrop. Ahead of the opening, the currency was expected to open around ₹94.84–₹94.86 per US dollar, compared with Tuesday’s close of ₹94.8175. The rupee had already weakened sharply on Tuesday as crude approached $100. 

The combination of higher oil prices and a weaker rupee added to concerns around India’s import costs. Higher crude increases dollar demand for energy imports, while a weaker rupee raises the domestic-currency cost of those imports. Market participants were also assessing how aggressively the Reserve Bank of India (RBI) could continue intervening to support the currency if oil-driven pressure persisted. 

Fed Hike Odds Reach 60% as Oil Fuels Inflation Concerns 

Higher crude prices also affected the global interest-rate backdrop. Markets were increasingly considering the possibility that stronger oil prices could reinforce the case for a Federal Reserve rate hike at the September meeting. The probability assigned to a September hike had risen to roughly 60% following Tuesday’s US session. 

This was accompanied by elevated US Treasury yields, with the 10-year yield moving towards 4.8%. Higher US rates and yields formed an additional global pressure point for emerging-market assets and added to the broader uncertainty entering India’s trading session. 

US Stocks Fall as S&P 500 Drops 0.58% Overnight 

Indian equities also entered the session after a weaker close on Wall Street. The S&P 500 fell 0.58%, while the Dow Jones declined about 1.18% on Tuesday. Software stocks were particularly weak amid concerns surrounding artificial intelligence disruption in the sector, alongside inflation and interest-rate concerns. 

The overnight US market weakness provided another negative cue before India’s opening bell, although the crude and geopolitical developments remained the more prominent factors behind the morning’s risk backdrop. 

Nifty IT Falls Around 3% as Coforge Drops 6% 

Domestic sectoral weakness was particularly visible in information technology stocks. The Nifty IT index fell around 3%, with Coforge declining about 6% after Chairman Om Prakash Bhatt resigned following concerns raised by an internal audit regarding the company’s board-evaluation process. 

Other major IT stocks, including HCLTech, Tech Mahindra and Infosys, also came under pressure. The sector’s weakness added a domestic corporate component to the broader global concerns around technology companies, higher rates and US market conditions. 

GIFT Nifty Falls 0.35% Before Weak Cash-Market Open 

The derivatives market had already indicated a weaker start before India’s cash market opened. GIFT Nifty futures were around 23,630, down 83.50 points or 0.35% during the pre-market period. 

The negative futures indication was followed by the Nifty’s opening below 23,500, with the benchmark subsequently remaining near 23,493 around 9:56 IST. The sequence provided a clear link between the overnight global backdrop, the pre-market indication and the early movement in India VIX. 

IPO and QIP Activity Adds to Secondary-Market Pressure 

Domestic market liquidity was also affected by continued primary-market activity. IPO and QIP activity was reported to be diverting some flows away from the secondary market, adding another pressure point while equities were already dealing with crude, currency and geopolitical concerns. 

This factor coincided with weakness in the broader market but was not presented as the principal trigger for the India VIX increase. The morning’s volatility backdrop remained dominated by the combination of oil, Middle-East developments and the resulting pressure on Indian equities. 

Graphite India and Adani Enterprises Gain Despite Weak Market 

Some stocks recorded gains despite the broader pressure. Graphite India rose more than 13% after GrafTech International announced a minimum 30% price increase for graphite electrodes. Adani Enterprises gained around 3.6% after agreeing to sell up to a 5.54% stake in its airport unit, raising roughly $1 billion. 

These company-specific developments provided pockets of strength during the opening session, but the broader benchmark movement remained negative as India VIX moved higher. 

India VIX Seasonality Shows September Split 9-9 

Historical data also shows a mixed September pattern for India VIX. The volatility index has delivered positive returns in 9 of 18 years during September. Its maximum positive September change was 34.92% in 2018, while the average positive change was 17.45%. The maximum negative change was -26.10% in 2009, with an average negative change of -9.93%. The average September change stands at 3.76%. 

At 11.77, India VIX remained well below its 52-week high of 28.90, while its 52-week low was 8.72. Its technical rating remained Neutral. The Classic pivot levels were R1 11.60, R2 11.96, R3 12.54, PP 11.02, S1 10.66, S2 10.08 and S3 9.72. 

India VIX’s early-session rise to 11.59 and subsequent move to 11.77 came alongside weaker Indian benchmarks, Brent near $100, renewed Middle-East escalation, a rupee near ₹94.85, higher US rate-hike expectations and pressure on IT stocks. The move remained contained, with India VIX still well below its 52-week high of 28.90. 

Source 

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