Markets wobble amid cross-border heat; India Vix at highest in a month

Benchmark indices NSE Nifty 50 and BSE Sensex turned shaky, while the volatility index spiked on Thursday amid rising tensions between India and Pakistan. 

The Sensex declined by 412 points, or 0.51 per cent, to close at 80,335, with 23 of its constituents ending in the red. The Nifty 50 fell 141 points, or 0.6 per cent, to 24,274. 

India on Thursday said it had foiled attempts by the Pakistani military to engage multiple military targets in northern and western India. In response, the Indian armed forces targeted air defence radars and systems at multiple locations inside Pakistan. 

Among major sectors, automotive, metals, pharmaceutical, and public-sector banks registered the biggest declines, with their indices falling around 2 per cent. Information technology and media stocks ended in the green. 

 

The fear gauge, India Vix, rose 10 per cent to 21.01, the highest level since April 9. The indicator derives its value from the trend in options trading. The weekly index expiry also added to Thursday’s volatility. 

“The sharp rise in the fear gauge was driven by escalating market uncertainty, compounded by volatility typically associated with the weekly index expiry. The surge reflects heightened investor anxiety,” said Devarsh Vakil, head of prime research, HDFC Securities. 

The decline was more pronounced in the broader market. The Nifty Midcap 100 index ended the session 1.95 per cent lower, while the Nifty Smallcap 100 was down 1.4 per cent, reversing most of the gains made in the preceding session. The rising tensions also weighed on the rupee, which fell sharply by 89 paise against the US dollar to close at 85.71. 

Experts said the India-Pakistan tensions and US moves on the trade front will continue to dictate the market trajectory going forward. 

“Market volatility is expected to persist as investors track further developments on the India-Pakistan front and US trade announcements,” said Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services.

 

The US Federal Reserve’s (Fed) remarks on inflation and its decision to keep the interest rate unchanged also soured investor sentiment. Fed Chairman Jerome Powell said he is in no hurry to cut interest rates due to the high level of uncertainty in the US economy, along with the inflation risk imposed by high tariffs on imports.

 

“The global market remains stable and positive, buoyed up by expectations of an imminent US trade deal with the UK and preliminary indications of trade talks with China,” said Vinod Nair, head of research, Geojit Financial Services.

 

While the markets and the rupee fell, strong foreign inflows into domestic equities continued. On Thursday, foreign portfolio investors (FPIs) bought shares worth ₹2,008 crore, marking their 16th straight session of buying. Since April 15, they have pumped nearly ₹50,000 crore into Indian equities. This is also the longest investment streak by FPIs since June–July 2023.