Indian Markets Witness a Black Monday: India VIX Sees Sharpest Rise in 9 Years

Sharp Decline in Equity Benchmark Indices

Indian markets are experiencing a Black Monday as equity benchmark indices have fallen more than 3% on Monday. This sharp decline is significant, but what stands out even more is the dramatic rise in the India VIX, or India Volatility Index, which is a measure of the market’s expectations of volatility over the near term. The India VIX skyrocketed by about 60% in just one day, reaching its highest level in the last nine weeks.

Unprecedented Surge in India VIX

The India VIX touched an intraday high of 23.15 and is currently trading up by 50%, hovering above the 21.5 mark. This marks the biggest single-day surge for the index since August 2015. Historically, India VIX and Nifty have shown an inverse relationship, indicating that a rise in volatility often corresponds with a decline in the Nifty.

Major Indices Suffer Sharp Corrections

The Indian equity markets are witnessing a sharp correction, with the Sensex and Nifty 50 each declining over 3%. The Nifty 50 index has slipped below the budget-day low of 24,074 and continues to extend its losses. All significant heavyweights of the index are contributing to the downside, exacerbating the market’s woes.

Asian Markets Lead the Sell-Off

The rout on Monday is being driven by Asian markets. The Nikkei 225 index has plummeted over 12%, and trading in the Kospi has been halted after the index hit a lower circuit. The Taiwanese index has also shed over 8% in Monday’s trading session. This widespread decline across major Asian markets has added to the pressure on Indian equities.

US Futures Indicate Continued Downtrend

Futures in the US are also signaling that the sell-off is far from over. The Dow Jones futures are down over 400 points, and the Nasdaq futures have dropped 700 points. This significant decline in US futures has had a ripple effect on Indian IT stocks, contributing further to the overall market downturn.

Conclusion

As Indian markets face this severe correction, investors are advised to stay cautious and closely monitor market developments. The surge in India VIX suggests heightened volatility and uncertainty in the near term. Understanding the historical inverse relationship between India VIX and Nifty can provide valuable insights for navigating these turbulent times.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.