The latest spike in the Vix is a sign that investors are visibly rattled by global developments and fear a further drawdown in stock prices, experts said.
The India Vix, also known as the fear gauge, skyrocketed 66 per cent on Monday, April 7, 2025, marking its largest single-day jump in history.
The surge was driven by growing US recession concerns and their impact on corporate earnings and investment flows.
The index, which reflects market volatility based on index option prices, ended the day at 22.8 -- its highest level since June 2024 amid uncertainty around the Lok Sabha election results.
The latest spike in the Vix is a sign that investors are visibly rattled by global developments and fear a further drawdown in stock prices, experts said.
"This sharp rise in volatility signals deep uncertainty among investors. Yet, the recovery in the final hour of trading underscores the resilience and determination of domestic market participants, who remain steadfast despite the tough conditions," said Rajesh Bhosale, technical analyst at Angel One.
The market unrest follows heightened trade tensions after US President Donald Trump imposed new tariffs, prompting retaliation from China.
Analysts have described the current market environment as "highly concerning".
"The market's short-term outlook remains weak. Given the extreme volatility and uncertainty, we recommend traders adopt a cautious approach in the coming days," said Shrikant Chouhan, head of equity research at Kotak Securities.
Chouhan further cautioned that a drop below the 22,000 level on the Nifty could trigger further declines.
The Nifty 50 index, after hitting an intraday low of 21,744, ended at 22,162 -- down 3.24 per cent from its previous close.
"The underlying trend of the Nifty is sharply negative with high volatility. Monday's swing low of 21,743 could now be considered an important short-term support, and one may expect buying to emerge from the lower levels," said Nagaraj Shetti, senior technical research analyst at HDFC Securities.
"Immediate resistance is placed at 22,400," Shetti added.
Manish Jain, chief strategy officer and director at Mirae Asset Capital Markets, advised a "cautiously optimistic" approach but warned of potential earning cuts of up to 30 per cent, given the challenging global environment.
"If earning contraction kicks in, a correction exceeding 10 per cent could push the Nifty to around 20,000 or lower. Investors should closely monitor this and the upcoming earnings," he elaborated.
On Friday, April 4, the Chicago Board Options Exchange's CBOE Vix had surged 15.29 points, or 51 per cent, to 45.31 -- its highest level in five years.
The jump in US volatility followed a 10 per cent selloff over two days after the imposition of sweeping tariffs by the US.
Feature Presentation: Ashish Narsale/Rediff.com
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