India VIX zooms 30% to nine-month high as West Asia tensions intensify

India's stock market saw heightened volatility and benchmark indices tumbled on Monday after US-Israeli attack on Iran, which killed Supreme Leader Ayatollah Ali Khamenei, escalating West Asia tensions. 

 

India VIX, the measure of market volatility in the domestic market, rose as much as 30 per cent to 17.81, the highest level since May 29, 2025. The volatility gauge is up 82 per cent so far this year amid muted market gains. 

 

The volatility gauge measures the market's expectation of future volatility based on Nifty50 index options contracts. It typically rises when market volatility is expected to increase, indicating higher uncertainty or risk in the near future.

 

 

The US and Israel fired missiles across Iran on Saturday, with the Supreme Leader Ayatollah Ali Khamenei being killed. Iran responded with strikes against Israel, as well as US bases and other targets in states including Saudi Arabia, Qatar, the United Arab Emirates (UAE), Kuwait and Bahrain.

 

US President Donald Trump said the forces sank nine Iranian naval ships and that combat operations would continue until all objectives were completed, according to Bloomberg.  

 

On Monday, crude oil surged by the most in four years, with Brent up as much as 13 per cent above $82 a barrel. Safe-haven assets have risen, with gold and silver gaining along with their exchange-traded funds. On the bourses, the Nifty and Sensex fell as much as 2.12 per cent and 3.3 per cent, respectively. Shares of Oil market companies (OMCs) tumbled along with airlines and tyre firms. 

 

The uncertainty related to the war in West Asia will loom large over the market in the near-term, VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said. The major risk from the market perspective is the energy risk arising from the surge in crude, he said.  

 

"Experience tells us that panic selling during a crisis is the wrong strategy. Investors should refrain from selling and watch how things evolve," Vijayakumar said. Data from crises during the last many decades tells us that an event like the present crisis will not have any impact on the market six months later, he said. "Weakness in the market can be used to slowly accumulate high-quality stocks in domestic consumption themes like banking, automobiles, capital goods and defence."

 

Sentiment remains fragile, with participants reluctant to deploy fresh capital amid limited geopolitical clarity, Ponmudi R, chief executive officer of Enrich Money, said. "In the absence of de-escalation or supportive macro catalysts, trading is likely to remain choppy and biased to the downside, as investors prioritise capital preservation over aggressive risk-taking."

 

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