India VIX spikes 8% as India-Pakistan tensions rise, market breadth in favour of bears

During the previous session, on April 8, the India VIX index spiked 12 percent.

Fear and nervousness in the domestic equity markets soared in trade on Friday, May 9, after cross-border tensions between India and Pakistan soared.

At 9.40 am, the India VIX index, which measures expected volatility in markets based on options trading, jumped to 22.6, higher by 7.52 percent, indicating rising caution in investors' sentiment.

Further, the market breadth remained in favour of the bears, as about 390 shares advanced, while 2,453 shares declined, and 83 shares were unchanged.

At 09:42 am, the Sensex was down 500.61 points or 0.62 percent at 79,834.20, and the Nifty was down 161.35 points or 0.66 percent at 24,112.45.

The escalating conflict between India and Pakistan is contributing to the nervousness in the markets. Overnight, several locations in Jammu and Kashmir, Punjab and Rajasthan, particularly Jammu Airport, which also houses an Indian Air Force station, and Pathankot Airbase came under attack after Pakistan resorted to heavy artillery shelling along with drone and loitering munition attacks.

"Given the current market dynamics, traders are advised to adopt a disciplined approach with strict risk management, focusing on short-term trading opportunities. Considering the prevailing global uncertainties, it is also prudent to avoid large overnight positions and enforce tight risk controls," said Hardik Matalia, Derivative Analyst, Choice Broking.

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"In the near term, the trend remains range-bound with a cautious undertone," said Sameet Chavan, Head Research, Technical and Derivative - Angel One. He added, if the weakness persists, Nifty may retest the 24,150 level, followed by the 200DSMA around 24,000. On the daily chart, Nifty continues to consolidate within a broad range for over three weeks. The recent price action has been erratic, forming a pattern of alternating up and down days.

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