Market Panic? India’s Fear Gauge India VIX Hits 5-Year High — More Turmoil Ahead?

The volatility index (India VIX) or India's fear gauge jumped over 59% to 21.94 on April 7, marking one of its sharpest single-day surges in 5 years. On Monday morning, as the Indian benchmark indices opened with 5% cuts amidst sharp selloffs across global markets, heightened volatility also followed.

According to market experts, such a steep jump in the VIX was witnessed previously during the COVID-19 pandemic and a sudden recurrence of this is indicative of panic-ridden investor sentiments, which shows potential for wild swings in either direction.

Global markets have also caved in to the pressures of the current situation wherein China has retaliated with 34% tariffs on US goods, further instigating fears of a potential trade war.  

Additionally, the US Federal reserve Chair Jerome Powell adopted a more cautious stance on rate cuts, further stoking the fire amid rising inflation concerns as well as slowing growth expectations.

Is There More Turmoil Ahead?

According to Osho Krishan, Senior Research Analyst of Angel One, "the recent downturn in the market has resulted in unprecedented lows for the calendar year, prompting participants to adopt a more cautious approach as they navigate these challenging times."

He added that this decline has been largely influenced by significant weaknesses in global markets, which have cast a shadow over investor sentiment.

"From a technical standpoint, the current market conditions appear quite troubling, as evidenced by the VIX spiking over 65 percent in just one day," he said.

This dramatic increase in volatility indicates significant uncertainty among investors.

"However, the notable recovery observed in the last hour of trading highlights the inherent strength and determination of domestic participants, who are showing resilience even in challenging circumstances," Krishan added.

Great Opportunity To Buy

According to financial expert and CEO of Shree Consultants Kishore Subramanian, the current market crash serves as a great opportunity to buy.

He said, "these are great opportunities for you to buy. India as an economy is based on domestic consumption for over 64% and we are not a country that is completely export dependent."

According to Subramanian, the tariff that Trump has imposed will impact countries like China, the European Union and countries which are highly dependent on export.

He added that India will not be impacted much as India is a country of more than 1.4 billion and India, as a country is locally dependent, "so the net impact on the GDP is going to be 3 to 5%, not as a percentage point of GDP."

he further said that the market is going to bleed because "we are interlinked as a nation and as an economy to the global markets. So if the Hang Seng tanks, if the Dow tanks, Indian markets Sensex and Nifty will tank. But remember these are great opportunities to buy. These are amazing opportunities to buy on dips," adding that investors can buy stocks, SIPs and mutual funds.

Also Read: Top 5 Biggest Crashes In Indian Share Markets’ History: Harshad Mehta, Ketan Parekh And More