India VIX surges over 50% in two sessions as middle east crisis jolts markets

Nifty Trading Plan for March 5

• India VIX surged over 50 percent in two days amid market sell-off
• Sensex closed below 80,000, Nifty ended under 24,500
• Experts advise caution as volatility may persist due to tensions

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The India VIX surged more than 50 percent over the last two sessions as continued selling in equities intensified amid escalating tensions in the Middle East.

The volatility gauge closed at 21.14, a level last seen on May 9, 2025, rising 23.4 percent from the previous close. The index had already jumped more than 25 percent on Monday.

Experts said the sharp rise in the volatility index signals growing fear in the market. The VIX is widely regarded as a measure of market sentiment, often described as a fear and greed indicator. A higher VIX typically suggests a bearish bias in equities as volatility and markets generally share a strong negative correlation.

Akshay Chinchalkar, Managing Partner and Head of Markets Strategy at The Wealth Company, said the surge was not surprising as demand for downside protection among investors has increased. He noted that historically when the VIX has spiked by at least 50 percent over a two-day period — which has happened only three other times in the past decade — it was lower in every instance after 20 days.

Experts also noted that the Nifty has strong support in the 24,200–24,250 range, and as long as this zone holds, a bounce in equities could occur, which may lead to a cooling in the VIX. However, they cautioned that the current geopolitical crisis is evolving rapidly, requiring investors to remain cautious.

Both benchmark indices extended losses for a fourth straight session. The Sensex closed below the 80,000 mark for the first time since April 2025, while the Nifty ended below the 24,500 level for the first time since August 2025.

Indian equities have faced sustained selling pressure since the start of 2026 amid weaker earnings growth expectations and limited exposure to artificial intelligence-related stocks, which have driven gains in several global markets.

The recent surge in crude oil prices — India’s largest import — has also dampened a nascent recovery in equities following progress in a trade deal between India and the United States.

Chandan Taparia, Head of Technical and Derivatives Research at Motilal Oswal Wealth Management, said markets may witness sharp swings on both sides as higher volatility keeps option premiums elevated.

He added that while higher premiums may offer opportunities for time decay strategies, sharp market swings could make it difficult to benefit from such strategies. Taparia said investors may consider focusing on structured option strategies or wait for the VIX to cool toward the 14–15 range for an improvement in market sentiment.