India VIX spikes 8%, at highest since April 8 as India-Pak tensions mount

India's volatility gauge rose another 8 per cent on Friday as tensions mounted after Pakistan fired missiles in Jammu and Kashmir last evening, in a significant escalation along the border.

 

India VIX, the measure of market volatility in the domestic market, jumped as much as 8.19 per cent to 22.7, the highest level jump since April 8 this year, according to Bloomberg data. This volatility came after the index spiked as much as 12 per cent on the previous day. 

 

India VIX measures the market's expectation of future volatility based on the Nifty50 index options contracts. It typically indicates an increase in market volatility and suggests that investors are expecting higher uncertainty or risk in the near future.

 

Pakistan fired eight missiles directed at Satwari, Samba, RS Pura and Arnia, all in Jammu & Kashmir on Thursday evening, which were all intercepted or blocked by air defence units. This comes in after India neutralised air defence radars and systems at many locations in Pakistan, a retaliation to the latter's attempt to engage several military targets. 

Read Stock Market LIVE: Markets down; Sensex drops 770 pts, Nifty tests 24K amid India-Pak tensions

 

The benchmark equity indices, Nifty50, fell as must as 1.39 per cent or 338 points to 23,935 points, while the Sensex tumbled 1.7 per cent or 1,366 points to 78,968 on Friday. Even on the current front, volatility was seen, as the USD/INR option volumes were more than double their five-day average, according to Bloomberg.

 

Under normal circumstances, on a day like this, the market would have suffered deep cuts, according to VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited. But this is unlikely given India's clear superiority in conventional warfare and the market resilience supported by global and domestic macros, he added. "Investors should not panic and exit from the market now. Remain invested, monitor the developments and wait for the dust to settle."

 

In the latest development, an air warning has been received from the Air Force station of a possible attack in Chandigarh on Friday.  

India neutralises Pakistan's missile

 

The defence ministry said military stations of Jammu, Pathankot, and Udhampur were targeted, with the Indian armed forces neutralising the threat according to the standard operating procedures with kinetic and non-kinetic means.   ALSO READ: Bharat Dynamics, HAL, GRSE spike up to 4% amid Indo-Pak border tensions

 

Electricity in cities of Jammu, Pathankot and other areas under Pakistani attack was snapped, leading to a complete blackout. 

 

There were blackouts in Amritsar, Jalandhar, Hoshiarpur, Mohali and Chandigarh in Punjab. An Indian Premier League match in Dharamshala in Himachal Pradesh, 80 km from the Pathankot airbase, was called off. Power supply was restored in some of these cities later in the night.

 

These developments come days after the Indian armed forces carried out coordinated missile strikes on terrorist infrastructure at nine locations in Pakistan and Pakistan-occupied Kashmir (PoK) under the code name 'Operation Sindoor.' The operation was carried out in the early hours of Wednesday (May 7) and came in response to the April 22 Pahalgam terror attack, which claimed the lives of 26 people.   

      ALSO READ: India Rupee extends fall as border tensions rise; opens lower at 85.84/$