India VIX cools 6% on monthly expiry as Trump's tariffs blocked, market breadth in favour of bulls

The market sentiment was tilted in the favour of bulls.

Fear and nervousness in the domestic equity markets fell in trade on Thursday, May 29, on the monthly expiry session, as investors digested fresh updates related to US President Donald Trump's tariffs, with the market sentiment buoyed by the US trade court's decision to block President Donald Trump’s sweeping tariff agenda

At 9.55 am, India VIX, which measures expected volatility in the markets based on options tariffs fell to 16.93, lower by nearly five percent, indicating easing cautio in investors' sentiment.

"Even though the index is still dancing in cautious waters, VIX staying above the comfy 15 zone signals that nerves aren’t calming down yet. Elevated volume during corrections only makes the market more fragile, setting it up for sharp intraday jolts and random whipsaws going ahead," said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

The Sensex was up 169.21 points or 0.21 percent at 81,481.53, and the Nifty was up 38.50 points or 0.16 percent at 24,790.95.

Further, the market sentiment was slightly tilted towards the bulls, as about 1,653 shares advanced, 1,308 shares declined, and 157 shares unchanged.

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Although the administration has appealed the ruling, which halts most tariffs for now, the case could head to the US Supreme Court — a pivotal battle with potential ripple effects across trillions of dollars in global trade.

Further, VK Vijayakumar, Chief Investment Strategist, Geojit Investments said that the US Federal court striking down the reciprocal tariffs is a clear message that the maverick president cannot ride roughshod over markets and economy with his questionable decisions.

"This court ruling is the second big blow to President Trump after the blow delivered by the bond market which forced the Trump administration to pause the tariffs for 90 days. From the market perspective, this is a positive development."

He added that the Nifty 50 is consolidating in a 500 point range within 24,500 - 25,000. A breakout or breakdown from this range appears difficult in the near-term. "All the action is in the mid and smallcap space in response to the results. Investors should not chase mid and smallcaps without any concern for valuations. Quality mid and smallcaps have the potential to outperform," he said.

On the technical front, Dhameja stated that unless the 25,100 lid is blown off with force, bulls might keep running into headwinds. On the downside, a sharp break below 24,700 could let loose fresh selling waves.

"Overall, the street’s mood stays indecisive, spiked with high volatility. Until a clear breakout or breakdown unfolds, expect more sideways grind, bull traps, and stop-hunting whipsaws to dominate the battlefield."

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