India VIX Surges 14.23% to 13.89 as Crude Tops $106, Nifty Slips Below 23,000

Mumbai, Sept 28: India VIX jumped in the early trade on Monday, increasing 1.73 points, or 14.23%, to 13.89 at 10:15 AM IST from an opening level of 12.16. The volatility index hit a high of 14.14 and low of 12.16 in early session. The decline followed Indian equities opening lower due to renewed uncertainty over US–Iran relations, crude prices above $106 a barrel, high US Treasury yields and domestic market weakness. 

India VIX, which reflects expected volatility in the Nifty based on Nifty options, had closed at 12.16 on Friday, 25 September, after declining 4.18%. Monday’s early-session rise therefore reversed part of Friday’s easing in volatility. The index remained well below its 52-week high of 28.90, but was above its 52-week low of 8.72. Its year-to-date return stood at 46.73% as of 10:15 AM. 

Nifty Falls 0.75% Below 23,000 As India VIX Jumps 

Indian equities began Monday’s session under pressure, with the Nifty declining 0.75% to 22,965 at 9:18 AM, while the Sensex fell about 509 points to 73,376. The Nifty had closed Friday at 23,140.50, meaning the index moved below the closely watched 23,000 level soon after the opening bell. 

The decline followed a weak domestic backdrop, with the Nifty recording its seventh consecutive weekly decline after falling 0.88% during the previous week. The prolonged losing streak formed the domestic setting in which Monday’s renewed global uncertainty emerged. 

The move in India VIX was accompanied by a sharp change in the index’s intraday range. From its 12.16 opening level, India VIX reached 14.14, marking a difference of nearly two volatility points within the early session. 

US–Iran Uncertainty Pushes Brent Above $106 

Renewed uncertainty surrounding the possibility of a US–Iran truce emerged as the key development before India’s opening session. Markets questioned whether an agreement could be reached after US President Donald Trump rejected an Iranian proposal concerning the reopening of the Strait of Hormuz. 

The development was followed by a rise in crude oil prices. Brent crude increased about 1.6% to $106 a barrel, while US crude rose approximately 1.1% to $93.47 a barrel. Brent had also gained roughly 17% during September. 

The Strait of Hormuz remained central to the oil-market developments because uncertainty surrounding the route added to concerns over global oil supply. The renewed rise in crude came after Friday’s softer oil and geopolitical backdrop had contributed to the earlier decline in India VIX. 

Higher Oil Prices Add Pressure to The Indian Market 

The move in crude above $106 became an immediate feature of Monday’s early market session. Indian equities opened lower as oil prices recovered, while the rupee also weakened marginally. 

The Indian currency opened at approximately ₹95.87 per US dollar, compared with Friday’s close of ₹95.82. The combination of higher crude prices and a weaker rupee occurred alongside the decline in the Nifty and the increase in India VIX. 

India’s exposure to imported crude makes oil prices an important component of the domestic market environment. Monday’s opening therefore followed a combination of higher oil prices, currency pressure and renewed geopolitical uncertainty. 

US Treasury Yields and Dollar Strength Add Global Pressure 

The oil-market developments were accompanied by continued pressure from global bond and currency markets. US two-year Treasury yields had increased by 55 basis points during September, as markets priced the possibility of further Federal Reserve tightening. 

The US dollar index also reached approximately 101.39, its highest level in two months. The combination of elevated Treasury yields and a stronger dollar formed another part of the global market backdrop entering Monday’s Indian session. 

Asian markets also opened cautiously. The MSCI Asia-Pacific ex-Japan index fell 0.2%, while South Korea’s Kospi declined 0.6%. Japan’s Nikkei, however, gained 0.8%, leaving the regional market picture mixed rather than uniformly negative. 

Positive Wall Street Close Fails to Offset Oil Concerns 

The previous US trading session had ended positively, providing a contrasting backdrop to Monday’s Indian opening. The S&P 500 rose 0.51%, the Nasdaq gained 0.48%, and the Dow Jones increased 0.93% on Friday. 

Technology and artificial intelligence-related stocks contributed to the US market gains. However, US equity futures were more cautious before Monday’s Indian opening, with S&P 500 futures down about 0.2% and Nasdaq futures broadly flat at around 8:15 AM IST. 

The contrasting movements meant that the weaker Indian opening was not accompanied by a broad US equity sell-off. Instead, the renewed oil and geopolitical developments formed the more prominent overnight change. 

Nifty 23,000 Break Adds to Early Volatility 

The Nifty’s movement below 23,000 became another notable feature of the early session. The level had been identified as an important support area before the market opened, with a sustained move below it associated with the 22,800–22,700 range in the market setup. 

By 9:18 AM, the Nifty was already at 22,965, placing it below the 23,000 mark. The index-level decline occurred at the same time as India VIX moved from 12.16 to 13.89 by 10:15 AM. 

India VIX is derived from Nifty option prices and represents expected market volatility over a 30-day period. Consequently, movements in the Nifty and changes in option pricing form the underlying basis for movements in the volatility index. 

FII Selling Remains a Background Domestic Factor 

Foreign institutional investor flows also remained part of the domestic market backdrop entering Monday’s session. Data available before the opening showed that foreign institutional investors had sold approximately ₹18,531 crore of Indian equities during September. 

Domestic institutional investors, meanwhile, had invested around ₹52,617 crore during the same period. The foreign selling trend was already present before Monday and was therefore a background factor rather than a new event arising during the opening session. 

The domestic market had also entered the week following its seventh consecutive weekly Nifty decline, adding to the market conditions preceding the latest rise in India VIX. 

India VIX Technical Levels Show 14.14 Early High 

At 10:15 AM IST, India VIX stood at 13.89, up 1.73 points or 14.23%. Its intraday range was 12.16 to 14.14, while the 52-week range remained 8.72 to 28.90. 

The technical rating for India VIX was shown as Neutral. The classic pivot levels for the day were 12.25 for the pivot point, with resistance levels at 12.74, 13.31 and 13.80, while support levels stood at 11.68, 11.19 and 10.62. 

Its September seasonality data showed that India VIX had delivered positive returns in 9 of 18 years. September’s average change was 4.85%, with the maximum positive change recorded at 34.92% in 2018 and the maximum negative change at -26.10% in 2009. 

Bank Strike Deferral Removes One Domestic Disruption 

A proposed three-day nationwide bank strike scheduled for 28–30 September was deferred following an understanding between the Indian Banks’ Association and the United Forum of Bank Unions on Sunday. 

The development removed the immediate prospect of the planned banking disruption during Monday’s trading session. It therefore remained separate from the main developments affecting India VIX during the early market hours, which were centred on crude oil, US–Iran uncertainty, global yields, currency movement and the Nifty’s decline. 

India VIX stood at 13.89 at 10:15 AM, up 14.23%, after touching 14.14, as Brent moved above $106, Nifty fell below 23,000, and US–Iran uncertainty remained elevated. The early-session market backdrop also included higher US Treasury yields, a stronger dollar, a weaker rupee and continued foreign equity outflows. 

Source 

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