Tensions flared late Thursday after Indian air defence systems intercepted eight missiles launched by Pakistan toward key border regions. This act of aggression sent shockwaves through the Indian financial markets the next morning.
Dalal Street Down
As markets opened on Friday, investors were greeted by a sea of red. The Nifty50 slumped 338 points at the open, starting the day at 23,935.75. The Sensex followed suit, plunging by 1367 points to open at 78,968.34. Broader indices like the Nifty Smallcap100 dropped around 1.7%, signaling widespread nervousness. However, the Nifty India Defence Index defied the trend, surging 2.5%, reflecting investor confidence in the country’s military preparedness.
The Fear Meter: VIX Jumps Over 8%
But the most telling indicator of investor sentiment was the sharp rise in the India Volatility Index—or VIX—commonly dubbed the "Fear Gauge." On Thursday, VIX closed 10.2% higher at 21.01. On Friday, it spiked another 8% during early trading hours. This sudden surge signals heightened anxiety among traders.
What Is the VIX?
The VIX reflects expected volatility in the market over the next 30 days. A high VIX typically corresponds with fear, panic, or uncertainty—often due to geopolitical tensions, economic instability, or major global events. Conversely, a low VIX denotes market stability and optimism.
Expert Take: Don’t Panic Yet
Despite the turbulence, seasoned experts are urging investors not to panic. Aniruddha Sarkar, CIO at Quest Investment Advisors, notes that Indian markets have historically shown resilience during border conflicts. Ambareesh Baliga, market veteran, adds that as long as “Operation Sindoor” remains contained, a quick market recovery is on the cards.
