Will Pahalgam attack impact stock markets? Volatility gauge sees biggest intraday jump since Apr 7

Stock Market Today: Today is only the second occasion when India VIX has risen in the past seven sessions

India VIX rises on Pahalgam attack: Indian stock market's fear index, India VIX, zoomed 8.2 per cent in the intraday trade on Wednesday, April 23, 2025, as investors closely monitored the terror situation in Pahalgam, Kashmir.

 

During the intraday trade, India VIX, or the Volatility Index, hit a high of 16.52 level on the National Stock Exchange (NSE), clocking the biggest intraday rally since April 7, 2025, when the index soared over 60 per cent.

 

Moreover, today is only the second occasion when the fear gauge has risen in the past seven sessions. Since April 9, 2025, India VIX has advanced in only one more session (April 21), when it added just 0.3 per cent on a closing basis.

 

On their part, stock markets have been wobbly today with the BSE Sensex gyrating in a band of 748 points. The BSE Sensex today hit a high of 80,255 level in early deals, driven by optimism in the global markets. The index, soon, pared gains and hit a low of 79,507 level as investors monitored the evolving situation in Kashmir following the Pahalgam terror attack.  Read Stock Market LIVE Updates Today Here 

 

On the NSE, the Nifty50 index swung between 24,120 and 24,359 amid investor nervousness.

 

Add to it, rising oil prices (Brent crude up over 1 per cent today), weak rupee versus the US dollar, and 'overbought' conditions in the India stock markets are capping upside in the market today, analysts said.

 

Pahalgam Terror Attack Latest News

According to reports, Prime Minister Narendra Modi will chair a meeting of the Cabinet Committee on Security (CCS) today, at 6 PM, to decide the next course of action in the Pahalgam terror attack case. The meeting will be conducted after Home Minister Amit Shah's return from the Pahalgam terror attack site.

 

The National Security Advisor and defence chiefs are expected to attend the meeting, reports said. On Tuesday, terrorists, dressed as army men, opened fire at tourists in Baisaran Valley near Pahalgam in Kashmir, in one of the deadliest terror attacks since the Pulwama Attack in 2019. The attack has claimed 26 lives.

 

Condoling the loss of lives, PM Modi said on Tuesday that those behind the "heinous" act will not be spared. Notably, the Resistance Front (TRF), a proxy group of the banned Pakistan-based Lashkar-e-Taiba (LeT), has claimed responsibility for the Pahalgam terror attack, which allegedly targeted non-Muslims in the region.

 

Will Pahalgam attack affect Indian stock markets?

While analysts note that such terror attacks cannot succeed in even "marginally impacting Indian economy and markets", they believe the developments are sentimentally negative.

 

In the short-term, investors will closely monitor the situation at the India-Pakistan border and watch out for any signs of enmity escalation between the two countries.

 

Over the long-term, however, Pakistan's political instability and basket case economy cannot do any damage to the Indian economy and markets.

 

"Markets may send this message today with the fundamental factors favourable for India. Moreover, US President Trump's message that he has no intention of firing the Fed chief, coupled with lower-than-threatened tariffs on Chinese imports in the US, and sustained buying by FIIs, will limit downside in the is Indian markets," said VK Vijayakumar, chief investment strategist at Geojit Investments Limited.

 

What is India VIX?

India VIX is an index to assess investors' expectation of volatility in the market over the next 30 days. Volatility Index measures the amount by which the benchmark Nifty index is expected to fluctuate, based on the order book of the index's option prices.